EcoWeek

Business confidence in free fall in March

Eco week 20-12 // 27 March 2020  
economic-research.bnpparibas.com  
5
ECONOMIC PULSE  
FRANCE: BUSINESS CONFIDENCE IN FREE FALL IN MARCH  
Judging by the indicators on our radar screen, the picture for the the March figures could be less precise than usual, as survey respons-  
French economy is deteriorating, albeit, it should be remembered, from es were gathered before 16 March 2020. Unsurprisingly, in all sectors  
a relatively strong position. For nearly all our indicators, the blue zone the biggest falls came in the balance of opinion on business outlook.  
(
(
representing recent trends) is shrinking, below the dotted black zone Equally unsurprisingly, employment prospects were also caught up in  
4-months ago momentum) and also below the grey circle (showing the turmoil, shedding 9 points.  
the long-term average). The data that interest us most are those which  
provide the most up-to-date information on the scale of the recessive  
shock triggered by the Covid-19 pandemic, namely confidence surveys  
for which data is available up to March, whereas the last hard data  
point is in January.  
Although consumer confidence looks relatively unscathed for now –  
INSEE’s summary indicator fell by only 1 point in March – INSEE has  
suggested that this might be a “sampling” effect, as the figures reflect  
mainly consumer confidence in the economic situation at the beginning  
of March. Even then, however, concerns were beginning to grow, as evi-  
The shock seems considerable. INSEE’s composite business confidence denced by the sharp deterioration in the balance of opinions on the op-  
indicator dropped by 10 points to 95 in just one month. This beat the portunities to make major purchases, and the prospects for standards  
previous record drop, set in October 2008, by 1 point. For once, the of living in France and for unemployment. We would therefore expect a  
manufacturing sector is showing the most resistance, with a fall in marked decline in consumer confidence in April. We would also expect  
its business climate indicator limited, surprisingly, to just 3 points, to see the deterioration of the business climate continue, but would  
compared to drops of 14 points in services and 13 points in retail. hope that the drop will be less ‘vertical’.  
The stability of the indicator in the construction sector is probably not  
significant. For all of the findings in this latest batch of survey data,  
INSEE has warned that in the context of the fight against Covid-19,  
Hélène Baudchon  
QUARTERLY CHANGES  
3
-month moving average (actual)  
-
-- 3-month moving average (4 months ago)  
Business climate - Manufacturing  
3
2
1
0
.0  
.0  
.0  
.0  
Exports of goods  
Business climate - Services  
Industrial production  
Business climate - Construction  
-
-
1.0  
2.0  
Consumer spending  
-3.0  
Business climate - Retail sales  
Unemployment Rate  
Employment climate  
Core HICP  
Consumer confidence  
HICP  
SOURCE: THOMSON REUTERS, BNP PARIBAS  
The indicators in the radar are all transformed into z-scores. By construction, the z-scores have mean zero and their values, which indicate how  
far the indicator is removed from its long-term average, are in the interval between -3 and 3 in almost all cases. In the radar chart, the blue area  
shows the actual conditions of economic activity. It is compared with the situation four months earlier (dotted-line). An expansion of the blue area  
signals an improvement. In the right pane, the surprise is an actual outcome that differs from the market forecast (Bloomberg).  
The bank  
for a changing  
world  
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