The improvement that was looming a few weeks ago has not been confirmed. In April, the business climate fell to 99, or 1 point less than in March, falling below its long-term average, INSEE said on Thursday.
In these geopolitically disturbed times, the morale of business leaders is struggling to regain real color and remains dull. And the decline in confidence concerns all sectors of activity, or almost. This is due to significantly less optimistic activity prospects, while consumption is struggling to restart.
Progress in the employment climate
In industry, the INSEE indicator lost 3 points to return to 100, and “the opinion of industrialists on the level of order books has fallen significantly,” explains the statistics institute. The trend is similar in services where business leaders are less confident about their future activity.
The PMI survey published at the start of the week by S&P Global nevertheless sent a more positive signal, pointing to an increase in demand “for the first time in a year”.
Finally, with construction starts at an all-time low, the morale of building contractors is darkening. The latter do not see the end of the tunnel and even anticipate a deterioration in their activity in the coming months.
Only retail seems to escape this gloom. The climate gained 3 points, driven by “the increase in balances of opinion relating to the general outlook for activity in the sector, past sales and future changes in the workforce”.
The latest barometer produced by the Movement of Intermediate Enterprises (Meti) and Banque Palatine, also published this Thursday, also highlights this hesitant and gloomy situation. More than half of mid-sized companies believe that their sector is doing worse than a year ago.
However, “in recent months, a little more of them have expressed their confidence in the future,” observes Nathalie Bulkaert-Grégoire, deputy general director of Banque Palatine in a press release. More than one in two expect an increase in their turnover this year. Cash pressures have diminished. And if they have revised their investment plans downwards, two thirds of them are still planning to do so this year, with a significant increase in their budget and associated jobs. Despite the slowdown in activity, most mid-sized companies (94%) say they still face recruitment difficulties.
Hopes in consumption
For the moment, the French economy is therefore not showing any sign of notable improvement. But the employment climate does not suffer from this. In April, it even increased by 1 point to 102. The France Travail and Credoc survey on labor needs in 2024 also confirms the dynamism of the labor market with a “historically high” level of hiring intentions.
While the year started off sluggishly, economic forecasters expect a gradual recovery driven by household consumption. In view of the latest PMI survey, Norman Liebke, economist at Hamburg Commercial Bank, believes that “it could occur as early as the second quarter of 2024 driven by the services sector”.
On April 30, INSEE will publish its first estimate for the first quarter of the year. In its March forecasts, the statistics institute expects stagnation in activity over the period, which would be followed by an increase in activity of 0.3% in the second quarter. The OFCE, for its part, expects an increase in GDP limited to 0.1% in the first quarter and 0.2% in the second. According to the Observatory, the savings plans announced by the executive to restore public accounts will nevertheless weigh on French growth in 2024. They should have a “moderately restrictive effect on growth in the short term,” the governor also estimated. of the Banque de France, François Villeroy de Galhau, in an interview with “Echos”.
