If you felt like the mood turned shakier in France lately, you are not alone. The Bank of France says business uncertainty climbed in September as firms flagged rising fuel costs and a softer economy, adding to bond-market tensions. That rise unwound much of the progress since the spike when the Iran war began.
The central bank's monthly gauges pull from text analysis of replies from 8,500 company leaders. In typical conditions, the indicator sits near 100.
Business uncertainty surveys lead investment decisions by a quarter or more. Market Briefs covers that data free every morning.
September's readings show uncertainty in industry and services at its most intense since April, with construction the highest since March. Executives, the bank says, are in wait-and-see mode, with projects delayed, orders placed later, and households showing greater caution in their spending.
Under the hood, activity still moved forward. Industry kept advancing, services picked up speed, and construction was roughly unchanged. Last month, companies saw raw material input costs climb sharply, while increases in selling prices were more subdued. In industry, 13% of businesses said they increased prices, only a bit above the roughly 10% that is typical for this time of year.
As the euro area's second-largest economy, France is contending with multiple strains: a sharp growth slowdown, student protests, and uncertainty over the government's ability to survive a parliamentary showdown on closing a yawning budget deficit. Near-term clarity also looks scarce as next year's presidential election will close the book on Emmanuel Macron's decade in power. Leading contenders Marine Le Pen and Jean-Luc Mélenchon vow sweeping changes to economic policy should they prevail in May.
Despite the backdrop, the Bank of France left its third quarter growth forecast unchanged at 0.1%. Governor Emmanuel Moulin said on LinkedIn, "The French economy is holding up in the face of the energy shock caused by the conflict in the Middle East," while adding that higher oil and industrial commodity prices are shaping the environment, "although there are no signs of a broad-based pass-through to prices." For households, that mix lines up with the caution showing up in spending, even as overall growth edges forward.
Political instability shows up in capex before it shows up in GDP. Get the free Market Briefs daily newsletter and follow it.
