Well, at long last we are starting to perhaps see some improvements in French business sentiment. Confidence in this space has been languishing for well over a year already but is this an early sign of things to come? The composite business confidence estimate picks up in December, recording a reading of 98.7 – its highest since June 2024.
The jump there is largely helped by a marked improvement in manufacturing confidence (102 vs 98 previously) while services confidence remained steady (98 vs 98 previously).
This now at least sees French business confidence move closer back towards the long-term average of 100. The last time the index touched that line was all the way back in March last year.
Going back to the report by INSEE, employment conditions eased a little with the index slipping to 95 from 96 in November. The drop owes mostly to the downturn in the balance of future workforce size in the services sector.
Meanwhile, there was also a sharp rebound in he whole sector comprising retail trade and trade and repair of motor vehicles. The index there gained seven points to 104, its highest since January 2024. This rebound mainly stems from a rise in the balances related to ordering intentions.
It’s not much but it is at least potentially a start of some improvement in fortunes for the French economy. Or at least that is what the optimists will be hoping for. Political uncertainty and instability has been a bane for France for quite some time now and that won’t go away in 2026. So, expect there to continue to be strong headwinds for the economy as a whole.
But at least for now, inflation isn’t so much so a problem but domestic demand conditions are still suffering for the most part. So, any improvement in sentiment is very much welcome.
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