French business confidence highest for a decade
It's taken ten years for French entrepreneurs to recover their optimism. The INSEE confidence indicator for December reached 112, a level last seen at the end of 2007
Confidence is high among French businesses in all sectors
This high level of confidence is broadly supported across sectors. In manufacturing, the December figures give signs of a stabilisation in confidence at a high level. While the personal production outlook of companies deteriorated slightly again (they peaked in September) and order books also softened slightly, they remain at their highest levels of the last ten years; it's too soon to see a risk of a turning point in the positive trend of recent months.
Most companies in the manufacturing sector have remained upbeat about the general economic outlook since October.
Prospects are just as bright in the building sector where confidence reached a high point as expected activity is on the rise. Low interest rates and a recovering housing market are essential for this sector which has been in recovery mode for the last three years. The December survey shows that hiring intentions remain high in building activities. Together with hiring intentions in services, which recovered in December their high mark of last April, this is great news for the job market. In the service sector, the rise in confidence looks more sustainable than earlier this year as it is supported by the highest confidence level in the general outlook in years. Even the retail sector gave signs of a revival of its hiring intentions, this component of the survey was positive for the first time since 2012.
| 112 |
French business confidence, December 2017A figure last seen in 2007 |
| Better than expected | |
A confirmation that recent GDP acceleration is broadly supported
These figures confirm that French industrial production should post another rebound in 4Q17 and bring yearly production growth above 4% after 2.8% YoY in 3Q17. Together with higher activity in the service sector, this should give strong support to GDP growth, which has been accelerating in 2017.
The December confidence survey confirms the recovery is broad-based.
A stronger than expected end of the year should bring GDP up to 1.8% in 2017. And let's not forget the positive reform atmosphere the Philippe government has managed to install. Even if most measures won't have taken effect by 2018, expectations are high. We expect those reforms to continue next year. This should help GDP reach 2.0% next year. Current levels of hiring intentions also point to a decline in the unemployment rate, which we believe could end 2018 below 9%.
Current levels of confidence remains consistent with further GDP acceleration
Download
Download article"THINK Outside" is a collection of specially commissioned content from third-party sources, such as economic think-tanks and academic institutions, that ING deems reliable and from non-research departments within ING. ING Bank N.V. ("ING") uses these sources to expand the range of opinions you can find on the THINK website. Some of these sources are not the property of or managed by ING, and therefore ING cannot always guarantee the correctness, completeness, actuality and quality of such sources, nor the availability at any given time of the data and information provided, and ING cannot accept any liability in this respect, insofar as this is permissible pursuant to the applicable laws and regulations.
This publication does not necessarily reflect the ING house view. This publication has been prepared solely for information purposes without regard to any particular user's investment objectives, financial situation, or means. The information in the publication is not an investment recommendation and it is not investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Reasonable care has been taken to ensure that this publication is not untrue or misleading when published, but ING does not represent that it is accurate or complete. ING does not accept any liability for any direct, indirect or consequential loss arising from any use of this publication. Unless otherwise stated, any views, forecasts, or estimates are solely those of the author(s), as of the date of the publication and are subject to change without notice.
The distribution of this publication may be restricted by law or regulation in different jurisdictions and persons into whose possession this publication comes should inform themselves about, and observe, such restrictions.
Copyright and database rights protection exists in this report and it may not be reproduced, distributed or published by any person for any purpose without the prior express consent of ING. All rights are reserved.
ING Bank N.V. is authorised by the Dutch Central Bank and supervised by the European Central Bank (ECB), the Dutch Central Bank (DNB) and the Dutch Authority for the Financial Markets (AFM). ING Bank N.V. is incorporated in the Netherlands (Trade Register no. 33031431 Amsterdam).