French business sentiment stabilizes in January, economic growth likely eased in Q4 2018

The INSEE survey released today implied that French business sentiment steadied in January. The headline sentiment indicator remained unchanged at 102, the same as in December. This is still the lowest level in over two years but above its long-term average. On the contrary to several other French survey indicators seen recently, the INSEE indices continue to be in line with positive GDP growth.

Delving into details, results came in mixed among the major sectors, with the construction and wholesale trade indices softer, but manufacturing sentiment stable and services sentiment slightly stronger.

Moreover, the employment climate index was assessed as stable in January by the survey respondents. With the Gilet Jaunes protests continuing and the outlook for other large member states seemingly having taken a turn for the worse, the French economy undeniably still faces significant challenges, noted Daiwa Capital Market Research in a report.

“GDP growth probably eased slightly in Q4 from the 0.3 percent Q/Q pace seen in Q3. But the outlook for this year is more uncertain. Despite Macron's panicked fiscal stimulus measures, we expect GDP growth to be about ½ ppt lower this year compared to 2018, when (like in Germany) GDP likely increased by around 1½ percent Y/Y”, added Daiwa Capital Market Research.

At 18:00 GMT the FxWirePro's Hourly Strength Index of Euro was slightly bullish at 66.1476, while the FxWirePro's Hourly Strength Index of US Dollar was slightly bearish at -65.254 more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex