The future of business seems to be darkening, according to INSEE. The Institute for Economic Studies announces that the business climate indicator in August reached its lowest level since April 2021. These would be the first effects on production of the “headwinds” weighing on the economy, analysts said.
The employment climate has also “deteriorated markedly” compared to July, according to INSEE. The business climate indicator, which summarizes the opinion of business leaders on various aspects of their activity, stood at 99, thus falling below its long-term average (100).
The climate “is clearly deteriorating” in industry, where the indicator lost 5 points in one month to 96, driven by more pessimistic opinions from business leaders “on order books and past production”, observes the ‘Insee. In services, the indicator lost two points and reached its long-term average (100). In retail, it remains almost stable at 105 (vs. 106). Construction is the only sector where the situation is improving slightly (1 to 106), with opinions being more positive “on recent and upcoming activity”.
“The fall in the business climate in August was expected in a gloomy economic context. With headwinds that remain significant, [it] should not rebound significantly in the coming months,” observes Sylvain Bersinger, chief economist at Asterès. The employment climate indicator for its part fell from 106 in July to 101 in August, its lowest level since April 2021. The deterioration is notably due to lower estimates of the future workforce in services.
“A ominous development for future employment and unemployment figures,” adds Bersinger, while noting that the indicator “remains slightly above its long-term average”. Already on Wednesday, another indicator, the provisional PMI index published by the agency S
“Now the two indicators point in the same direction,” notes Charlotte de Montpellier, economist at ING. For her, unemployment “will stop falling” in the coming period, although structural factors such as the aging of the population “will keep it at a not too high level”.
“This time, the effect of recent interest rate hikes” by central banks around the world, including the European Central Bank (ECB), “are being felt.” “And every new rate hike is more likely to be a monetary policy mistake. According to Charlotte de Montpellier, “all the engines are disappearing at the same time”, low interest rates, improving foreign trade, huge government spending in support of growth as the “whatever it takes », or the energy shield.
So, “all of this points to weaker growth, and the risks of one or two quarters of negative growth have increased,” she said. On Wednesday, Norman Liebke, economist at Hamburg Commercial Bank, which publishes the PMI index with S
The government is currently betting on a 1% increase in GDP for the year 2023. On Thursday, during his back-to-school speech in Alex (Haute-Savoie), the Minister of the Economy Bruno Le Maire promised to maintain an economic and tax policy favorable to companies, despite the spreading over 4 years of a production tax initially scheduled to disappear in 2024.
