French Manufacturers' Sentiment Falls Slightly In March

Despite the ongoing pension reform strikes, French manufacturers' confidence weakened only slightly in March to mark the first fall in four months as their view about past and future production deteriorated, survey data from the statistical office Insee revealed Tuesday.

The manufacturing confidence index dropped to 104 in March from 105 in the previous month. The reading was forecast to fall to 103 from February's originally estimated value of 104. The score remained above the long-run average of 100.

The sub-index measuring manufacturers' views towards past production weakened to 10 in March from 16 in February, while the overall order book balance rose somewhat to -12 from -14.

General production expectations deteriorated to a negative level in March with the corresponding index falling to -1 from 0.

The index reflecting the personal production expectations of manufacturers declined to 11 from a stable score of 14.

The finished-goods inventory balance also worsened at the end of the first quarter with the corresponding index falling by 5 points to 13.

The index for the expected trend in selling prices in the next three months remained stable though at a high level in March. The relevant index stood at 29.

Business managers' concerns about economic conditions tightened after easing a month ago with the corresponding index rising to 34 from 32.

The overall business confidence index that comprises the responses of business leaders from sectors namely manufacturing, construction, services, retail trade, and wholesale trade, also worsened slightly from 104 to 103 in March.

The business climate has deteriorated a bit in most activity sectors except in wholesale trade, the survey said. The survey in wholesale trade is conducted bimonthly.

The latest survey confirmed that activity in France is resilient even if the outlook for the coming quarters remains moderate, ING economist Charlotte de Montpellier said.

The impact of global slowdown on exports, high inflationary pressure, tight monetary policy and the recent banking sector turbulence will have negative impact on the economic activity, the economist noted.