UPDATE: French business confidence has surged sharply in December, reaching a reading of 98.7, the highest level since June 2024. This significant improvement is primarily driven by a notable increase in manufacturing sentiment, which rose to 102, up from 98 in November.
The latest data from INSEE reveals that while manufacturing confidence strengthens, services confidence remains unchanged at 98. This uptick brings French business confidence closer to the long-term average of 100, a level not seen since March 2023.
Employment conditions, however, show signs of strain, with the employment index slipping to 95 from 96 in November. This decline is linked to concerns about future workforce sizes in the services sector. Despite this, the retail trade and motor vehicle repair sectors saw a sharp rebound, with the index jumping seven points to 104, marking its highest level since January 2024. This rebound is fueled by increased ordering intentions, signaling potential optimism for the economy.
This latest shift in business sentiment is critical for France, which has been grappling with political uncertainty and economic instability. While inflation appears to be under control for now, domestic demand continues to struggle. The rise in business confidence offers a glimmer of hope for recovery; however, experts caution that strong headwinds remain.
As officials and economists analyze these developments, all eyes will be on how this trend unfolds in the coming months. The potential for improvement in the French economy hinges on sustaining this momentum amidst ongoing challenges.
With 2026 approaching, the business community remains cautiously optimistic, recognizing that while this is a positive step, significant hurdles still lie ahead.
