French business confidence fell roughly two points in February to 97 (unrounded 97.4) after the 99 (unrounded 99.3) reading in January. This puts a dent in the recovery optimism with this being the weakest estimate since October last year. Of note, the business climate continues to hold below the long-term average of 100 still. The last time the indicator was above the key threshold was all the way back in March 2024.
Of note, we're seeing a deterioration in both manufacturing and services confidence on the month. The former fell to 102 in February, down from 105 in January. Meanwhile, the latter dropped to 95 in February - down from 98 in the month before.
Besides that, there were also notable declines in the retail trade climate (dropping to 98 from 99 before) and more importantly the employment climate. The latter continues to trend lower, indicating weakening labour market conditions in French economy. The index there falls to 93 (unrounded 92.7) in February, marking the lowest estimate since April 2021.
The report here is one that tends to fly under the radar but it does provide some general idea of business activity sentiment in the French economy. The PMI data is no doubt more comprehensive but at least this doubles up as a secondary indication of how things are playing out on the ground.
