French business sentiment to inch up again

The Bank of France Business Sentiment indicator for the manufacturing sector is likely to increase from 99 to 100 in June, echoing the  improvements recorded in the PMI survey. This level means a return to the historical average and would be consistent with GDP growth rate close to 0.4-0.5% qoq estimates Societe Generale. 

According to Societe Generale, French business sentiment will continue to be supported by a structurally low oil price, weak euro, improved credit channels and lower corporate tax burden. 

"However, we think that uncertainty, notably from Greece, is likely to cap any substantial improvement in business confidence over the coming months", adds SocGen. 

On a related note, the breakdown of the PMI surveys suggest that the recent rebound in import prices is beginning to compress profit margins as firms keep prices constant to maintain competitiveness.