Published on 25 July 2024
The Banque de France publishes a range of monthly and quarterly economic surveys that provide a snapshot of the French economy in the form of business climate indicators and short-term forecasts.
According to the business leaders surveyed (approximately 8,500 companies and establishments questioned between 26 June and 3 July – half prior to the first round of the French legislative elections and half before the second), activity rose slightly in June in market services and more markedly in industry and construction, helping businesses to catch up after a sluggish May. Weather conditions may have hampered activity somewhat in some sectors. According to business expectations for July, activity should pick up in industry, but remain sluggish in services and contract in construction. Importantly, our uncertainty indicator based on comments by surveyed companies jumped to its highest levels since the 2022 energy crisis. Order books were still deemed insufficient in almost all industrial sectors with the notable exception of aeronautics. In construction, order books continued to thin out in the finishing works sector, but were still considered significantly less impaired than in the structural works sector.
According to business leaders in industry, there was a slight upturn in raw material prices after an almost uninterrupted decline over the past year. Selling prices continued to moderate. In June, the proportion of businesses increasing their prices in industry and construction (5% and 2%, respectively), was a little below pre Covid June levels. At the same time, the proportion of businesses reporting a drop in their prices (5% and 7%, respectively, in industry and construction) exceeded pre-Covid levels. In market services, the proportion of businesses reporting a rise in their prices (10%) had almost normalised.
Supply difficulties increased slightly in industry (cited by 13% of business leaders) and were most severely felt in the automotive and aeronautics sectors (with one-third of businesses affected), linked to shipping problems in the Red Sea and problems associated with certain components (microprocessors). Recruitment difficulties continued to gradually trend downwards, but remained high, with 35% of businesses (all sectors combined) mentioning them in June compared with 36% in May.
Based on the survey results as well as other indicators, we estimate that GDP should rise slightly by 0.1% during the second quarter of 2024 after a 0.2% increase in the first quarter.
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Updated on 25 July 2024