French business climate index rises to six-year high in August, GDP growth to moderate slightly in Q3

The INSEE French business climate survey came in at a six-year high for the month of August. This is following the upbeat message from the flash PMIs and Commission consumer confidence index. The INSEE French business climate survey similarly provided a positive picture of current economic conditions. In particular, the headline business climate indicator rose for a fourth straight month in August from 108 to 109. This level was last seen in June 2011.

The improvement showed more positive sentiment in the manufacturing and services sectors, with the relevant indicators rising by 3 points and 2 points to 111 and 106 respectively, with the former at its highest level in nearly a decade.

On the contrary, construction companies and retailers recorded a slight slowdown in business confidence, although their respective readings continued strongly above their long-term averages. While this survey hinted at a possible slight acceleration in the economic growth in the third quarter, the average French composite PMI for July and August was slightly below the multi-year high seen in the second quarter.

“With French consumer confidence having taken a notable step lower at the start of the quarter, on balance, we maintain our view that GDP growth in the euro area's second-largest member state will likely moderate very slightly in Q3, by 0.1ppt to 0.4 percent Q/Q”, noted Daiwa Capital Markets Research.

At 20:00 GMT the FxWirePro's Hourly Strength Index of Euro was slightly bullish at 72.6664, while the FxWirePro's Hourly Strength Index of US Dollar was neutral at 44.5098. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex

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