URGENT UPDATE: French business confidence has surged to a significant new high, with the composite business confidence estimate reaching 98.7 in December 2024, the highest level since June 2024. This marked improvement is primarily driven by a notable rise in manufacturing sentiment, which jumped to 102 from 98 previously.
This development signals a potential turnaround for the French economy, which has struggled with low confidence levels for over a year. The latest data from INSEE suggests that while manufacturing optimism is climbing, confidence in the services sector has remained steady at 98. This shift brings overall business confidence closer to the long-term average of 100, a level last reached in March 2023.
In addition to manufacturing gains, the retail trade sector has also seen a significant rebound. The retail trade index surged by seven points to hit 104, marking its highest level since January 2024. This increase is largely attributed to improved ordering intentions, indicating a boost in consumer demand.
Despite these positive signs, challenges remain. Employment conditions have slightly worsened, with the employment index dipping to 95 from 96 in November. This decline reflects concerns about workforce size, particularly within the services sector, which continues to face political uncertainty and instability.
While inflation is currently less of a concern, domestic demand remains weak. Analysts emphasize that any improvement in business sentiment is a welcome development, but caution that strong headwinds will persist as France navigates ongoing economic challenges.
As the situation develops, many will be watching closely to see if this boost in confidence translates into sustained economic recovery. For now, optimism is cautiously rising as businesses and consumers alike hope for more favorable conditions in 2025.
