French Business Confidence Down Again In September

French business confidence fell to its lowest level in five years in September. An index of sentiment among 4,000 manufacturers fell to 92 from a revised 97 in July, according to the French national statistics office INSEE. That was the lowest reading since August 2003.



The sub-index measuring sentiment on the economic outlook fell to minus 42 from a revised minus 33 in July; the outlook for orders dropped to minus 24 from a revised minus 19; and the foreign orders component slipped to minus 27 from a revised minus 16. The measure of French executives' outlook for their own production fell from a revised minus 1 to minus 10.

Europe's manufacturing and service industries contracted at the fastest pace in almost seven years in September according to the flash reading on the composite purchasing managers index. French manufacturing contracted at the fastest rate in several years, while French services showed a very slight expansion. The French economy contracted for the first time in more than five years in the second quarter, shrinking by 0.3 percent from the first three months. Thus the situation must be touch and go whether we see a technical recession in the third quarter, or whether the French economy just manages to scrape a slight expansion by a hair.