Business environment
Le moral des patrons s’améliore

Recovery in sight?

In August, the INSEE institute has registered an improvement of the business environment in France, across all industries. The indicator has reached its best level since summer 2011. Economists ended up suspecting the OECD of having been too pessimistic: the international organization initially predicted a growth under 1% in 2015.

The theory of economic upturn, which had been announced earlier this year, seems to be confirmed. French Minister of Finance Michel Sapin highlighted the trend, announcing that "recovery is spreading throughout the economy".

An optimistic wind among executives

Every month, the INSEE assesses the business environment in France by asking 10,000 business executives their opinion. The indicator summing up this temporary appreciation is almost stable since May. But in August, it rose by one point and passed for the first time in four years the threshold of 100 points, which corresponds to the long-term average. The indicator shows a favourable activity in services, industry and construction.

Other promising point: the turnaround indicator, which detects the moment when the economic upturn will start reversing, has been showing a favourable situation for several months.

Caution still applies

Oil price is declining, the Euro is losing value to the dollar and interest rates are at an all-time low. These three situations push economists such as Christopher Dembik from Saxo Bank or Jean-Marc Daniel, teacher in the ESCP Europe, to compare the current background with the economic recovery of the 80's and 90's. Interviewed by the newspaper Le Figaro, they declared expecting a 2 to 2.5% growth by the end of François Hollande's term.

But the experts also state that these three factors will not be enough to boost growth. Improvement is still fragile. The Chinese market, which represents a significant part of industrial investment in France, is currently highly volatile. If the Chinese growth slowdown continues, French GDP will inevitably feel the impact.

In addition, the recovery identified in France has no effect on unemployment yet: the number of job seekers registered in August rose by 0.6% compared to the figures in July and the 4.6% figure in one year.