Business confidence of French economy to improve in March

Societe Generale notes..

• The French National Statistical Institute (INSEE) business confidence index for the whole economy is expected to improve from 94 to 95 in March, while the manufacturing index should remain unchanged for a fourth consecutive month.
  
  
• Historically, the 94 reading for the whole-economy indicator is consistent with a GDP growth rate of 0.2% qoq, which is below our forecast of 0.4% qoq growth in Q1 15 growth.
  
  
• French business leaders still need to be convinced that all these positives can materialise into a solid recovery.
• Our GDP forecast for 2015 is consistent with the INSEE business confidenceindex, improving gradually to 100 by mid-year.
  
  
• We thus expect continuing improvement overthe coming months.
  
  
• Lower oil prices and a weaker euro should play out, while governmentmeasures including tax cuts (CICE) should also start to positively impact business confidence.
  
  
• Nevertheless, we do not consider these positives significant enough to boost the INSEEbusiness survey above historical levels.