French business confidence to remain unchanged in September

The French National Statistical Institute (INSEE) business confidence index for the entire economy is expected to remain unchanged at 100 in August (historical average = 100), while the manufacturing index is expected to drop from 103 to 102 on the back of concerns related to global trade. The improvement for the whole economy would come from higher confidence in the retail and construction sectors. The INSEE business survey is a reliable tool that uses a sample of 20,000 companies (many more than the PMI measure, which only asks around 400 firms). 

Looking ahead, it is expected that corporation tax cuts will start to filter through to the economy and positively affect business confidence. The hope is that these cuts, along with lower oil prices, will start to boost profit margins by the end of 2015, in particular in the manufacturing sector. 

"We maintain the view that French business leaders still need to be convinced that these positives can also materialise into sustainable growth, which is likely to cap any improvement in business confidence", notes Societe Generale.