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Business Confidence in France may have reached its low point - ING

FXStreet (Łódź) - Julien Manceaux from ING comments on the French business confidence numbers which he believes have reached the lowest point and should now see a rebound.

Key quotes

"This morning, the main confidence indicators published by the Bank of France showed overall a stabilization at a low level. Business confidence as a whole remained at 91.0, its lowest level since August 2013."

"Confidence decreased in the building sector, stabilized in services and retail and edged up slightly in manufacturing. As such, it is way too early to talk about a rebound in manufacturing confidence (the index came from 96 to 97.1 in October, which remains much under its levels of the first semester), especially if one considers that several sub-components deteriorated further: order books and the general business outlook are back at their lowest levels since the summer of 2013."

"The improvement comes from better recent production figures, more pricing power (though it remains low) and an improving 'own production' outlook (despite lower order books…)."

"The more forward looking manufacturing PMI confirmed that if the current situation is finally better than expected, the outlook remains grim: the PMI went further in contraction territory in October, at 47.3."

"While the building sector is still facing low consumer confidence and legal uncertainties which explains why prospects of new dwellings decreased again in October, confidence in the important service sector stabilized in October."

"If the general outlook deteriorated again in services (which explains why the PMI figure was again lower in October, at only 48.0), the expected turnover and current business situation components compensated the latter in the INSEE survey."

"On a more positive note, recent labor force trends even improved in October and reached their highest level of the last 12 months."

"All in all, today’s figures show that confidence may have reached its low point. Even if it continues to point to a contraction in activity, some components suggest that a slow improvement is possible throughout the end of this year. However, one will need much higher confidence levels if we are to see a rebound in GDP growth in the fourth quarter."

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