Business activity growth expectations in France weaken in June
Staff Writer |
The IHS Markit Business Outlook survey shows waning in optimism among French private sector companies amid a broad-based fall in the degrees of business confidence recorded for activity, new orders, business revenues, capital expenditure and profitability.
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Meanwhile, firms expect weaker inflationary pressures than in the prior survey period.
A net balance of +32% of panel members forecast a rise in business activity over the next 12 months, extending the current period of optimism to five-and-ahalf years.
That said, the degree of positive sentiment is the weakest since October 2016.
Low interest rates and strong household consumption are among the reasons supporting confidence.
Positive growth expectations with regard to business activity are recorded in both the manufacturing and service sectors, however, the level of optimism has eased in each instance.
Service providers remain more confident than manufacturers.
In line with the trend for business activity, French private sector companies expect new orders to increase over the coming 12 month period.
At +28% in June, the net balance of firms forecasting a rise is down from February’s seven-year record (+37%) and the weakest seen since October 2016.
Amid weaker sales expectations, private sector firms in France are anticipating a softer increase in business revenues.
With a net balance of +24% of survey respondents expecting a rise, the degree of positive sentiment on this metric is the weakest since October 2016.
In turn, this has led to dampened confidence towards profitability.
On the back of strong sales expectations, private sector companies in France plan to hire additional workers over the next 12 months.
The degree of positive sentiment has dipped slightly from the prior survey period and is the weakest since October 2016 but remains strong given the historical context of the series.
Employment numbers are forecast to rise in both manufacturing and service sectors and to a greater extent in the latter.
Following a similar trend to employment, firms plan to increase capital expenditure over the next 12 months.
A net balance of +18% of panel members forecast a rise, signalling a weaker degree of positive sentiment than in February (+20%), but one that remains firmly above the long-run average (+7%).