The business climate suffered a major downturn in October

In October, the business climate indicator fell in France, according to INSEE data. The decline is particularly notable in business, while services hold up better. Economic and political uncertainty weighs heavily on the outlook for business leaders, particularly in the transport sector.

Business declines significantly

INSEE announced a decline in the business climate in October, with a decline of one point in the overall indicator, which stood at 97, below its long-term average of 100. This decline comes after two months of progress, in August and September. The institute specifically identifies “ big fall » there is a climate businesswhich fell significantly, while the services sector showed some improvement.

The industry’s business climate indicator recorded a “ largest monthly decline » from November 2008, outside the health crisis period. In fact, it fell by 7 points, going from 99 in September to 92 in October. This decline is explained by growing pessimism among business leaders, especially in sectors linked to production and order books. According to INSEE, “ every opportunity comment » contribute to this decline, especially those related to production expectations and order books, both domestic and foreign.

The transport sector is the most affected, especially in the manufacture of transport equipment, where the indicator falls significantly. This sector has reached its lowest level since December 2021. Companies are struggling to sell their stocks, with the balance of opinion on stocks of finished goods increasing, reaching the highest level from August 2023. Business players therefore have to face an increasingly uncertain economic environment, affected by a decrease in demand, both in France and abroad.

Growing economic uncertainty is putting pressure on the business environment

At the same time, INSEE sees some improvement in services. The business climate in this region was at 101, returning to the level in June, after a period of stability. This will allow the overall mark to not drop further. However, this improvement in services was not enough to offset the decline seen in business.

In the sales sector, the business climate registered a small drop of one point, to stand at 99. On the other hand, the construction sector remains stable with an indicator at 100, according to its long-term average. However, INSEE mentions a slight decrease in views on future activity in this sector.

Finally, the employment situation, which indicates employment opportunities, registered a decline in October, going from 99 to 97 points. This decline is particularly evident in services, a key sector for employment in France.

One of the main reasons for this decline is growing economic uncertainty. INSEE notes that the ” balance of economic uncertainty sentiment is going back a lot », approaching its long-term average. This situation puts pressure on the confidence of business leaders, who show more and more doubts about the future of their activity, in a context characterized by inflation and geopolitical tension.