Europe > Western Europe > France > Confidence part French manufacturers improved slightly in October,

France: Confidence part French manufacturers improved slightly in October,

2013/10/25

Confidence part French manufacturers improved slightly in October, reflecting better assessment of recent business activity and a further development in order books, reinforcing expectations that the economic recovery would continue in the third quarter.

Survey data released by statistical office INSEE on Wednesday showed that the business confidence indicator for the manufacturing sector climbed to 98 points from 97 points in September, indicating a broadly stable business climate. The October outcome matched expectations.

Separately, INSEE reported today that French business leaders expect world and foreign request to improve in the fourth quarter, continuing the trend from the third quarter.

Sentiment part surveyed business mangers regarding the completed change in production rebounded markedly in October, but remained below its historical average. Meanwhile, their views on personal production expectation turned less upbeat.

Manufacturers' order books showed a further development, albeit modest, during the month. Stocks of finished products held largely stable.

The survey as well showed that general production expectations, which represents respondents' views on the industry as a whole, turned additional optimistic in October, and the relevant indicator moved above its long-term average for the initial time since July 2011.

"This survey confirms that the French economy is reaching a turning point mainly thanks to better foreign orders," ING Bank economist Julien Manceaux said. "The better figures for the service sector could help unemployment to stabilize in early 2014."

However, the economist expects the development to be slow and sees the French economy staying close to stagnation in 2013.

The statistical office further revealed that the composite business climate indicator, comprising all business-sub sectors, stabilized at 95 points in October. Construction firms were slightly additional upbeat about their business conditions, while confidence part retailers and service providers weakened.

Underpinning the strength of the French manufacturing sector, data published by the statistical office this month showed that factory production grew 0.3 % sequentially in August, ending three successive months of declines.

Before this month, the Bank of France had lowered its increase estimate for the third quarter to 0.1 % from 0.2 % predicted before, citing the unimpressive September data that showed a lack of development in business sentiment in the backdrop of weaker-than-normal order book levels.

Meanwhile, the International Monetary Fund raised the GDP forecasts for France. The lender expects the economy to grow 0.2 % this year and expand 1 % in 2014.

The French economy grew 0.5 % in the second quarter, following a 0.1 % contraction in the initial three months of the year.

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