Posted Sep 22, 2022, 10:23 AMUpdated on Sep 22, 2022 at 10:37
While the outlook is darkening for the French economy, the morale of business leaders is withering. The business climate lost 2 points in September, INSEE said on Thursday. At 102, the indicator nevertheless remains slightly above its long-term average (100).
With the exception of construction, all sectors contributed to the decline. Between the uncertainties on the evolution of the conflict in Ukraine, the explosion of their costs, the threats of power cuts and energy rationing this winter, the bosses are worried about their business prospects. Even in the service sector, which benefited from a glorious summer season thanks to the return of foreign tourists to France and in which the climate remains at a high level (106).
The mood is darkest in retail. Falling to 96, the index is moving away from its long-term average. After a small upturn in August, traders fear the consequences of inflation on household consumption. Reflecting their pessimism about the evolution of their activity, “order intentions are falling sharply and are at their lowest since November 2020”, notes INSEE.
In industry, too, the mood is becoming increasingly gloomy. The index fell by only 1 point in September, but many warning lights came on alerting to a more tense situation.
As in previous months, business leaders are pessimistic about their order books. Although down slightly, inventories also grew. This means that they will have to be sold, and this, at a time when demand, domestic and international, is slowing down.
Beyond that, it is the production difficulties that are worrying. The INSEE survey certainly confirms a stabilization of supply difficulties – at a high level. But while the energy bill is soaring in many sectors, manufacturers fear having to restrict their production, or even interrupt it during the winter.
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