Confidence in France improves to seven-year high at start of 2018
Staff Writer |
The IHS Markit Outlook survey signals heightened optimism among French private sector companies, with degrees of confidence with regard to business activity, new business, employment, business revenues and profits all rising from the previous survey period.
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The net balance of firms forecasting higher input costs fell, while that for output charges increased.
With a net balance of +42% of survey members forecasting an expansion in business activity, confidence among French private sector firms hit a seven-year high during February.
Robust global growth, strong investment and low interest rates are frequently cited as factors supporting optimism.
Positive expectations regarding activity are broadbased across both the manufacturing and service sectors, with the degree of confidence improving from October in each instance.
Service providers remain more optimistic than their goods-producing counterparts.
Strong growth on both a European and global level is boosting sales expectations at firms operating inside the French private sector.
Indeed, the proportion of firms anticipating a rise in new business is up to +37% during February, its highest level in seven years.
In line with this trend, the net balance of private sector companies forecasting revenue growth is up to +31% during the latest period (also sharpest since February 2011), thereby boosting firms profit expectations.
French private sector companies plan to hire additional staff members over the coming one-year period, in response to higher client demand.
The degree of positive sentiment remains weaker than seen in the aftermath of the presidential election in June last year, but remains among the sharpest recorded since the series collection began over eight years ago.
Manufacturers are set to take on additional workers to a weaker extent than they were in October, while the opposite is true of service providers.
Contrary to employment expectations, firms forecast a slightly weaker rise in capital expenditure over the coming 12 months, compared to the October survey.
Nevertheless, at +20% in February (+22% previously) the net balance for capex remains among the strongest recorded since combined manufacturing and services data were first available in October 2009, and is one of the highest globally.
French private sector companies continue to anticipate higher input costs over the coming 12-month period, amid widespread expectations of higher raw material prices.
That said, the proportion of firms forecasting this has dipped slightly from October’s six-and-a-half year peak.
In contrast to the trend for input costs, the net balance of firms planning to raise their selling prices has risen, largely reflecting efforts to mitigate anticipated cost increases and capitalise on strong client demand. ■