France: Business confidence deteriorates in May
May 24, 2011
In May, the business sentiment index, developed by the National Statistical Institute (INSEE), dropped to 107 points from the revised 109 points in April (previously reported: 110 points). The reading marked a three-month low and diverged from market expectations, which had seen the index at 109 points. Despite the monthly drop, the index remains above its long-term average of 100 points. The deterioration in business confidence reflected a sharp drop in the general production outlook as well as declining demand and total order levels, thus suggesting weaker economic activity in the second quarter of the year. In the first quarter, the economy grew 1.0% over the previous quarter, the fastest expansion since Q2 2006. According to the monthly index of business activity (MIBA) elaborated by the Central Bank, GDP will increase 0.5% in the second quarter, while the March quarterly economic outlook released by INSEE has the economy expanding 0.4%.