French business confidence picks up in December, boosted by manufacturing sentiment

French business confidence has improved in December 2024, with a composite index reading of 98.7, marking its highest since June 2024. This uptick is primarily driven by a notable rise in manufacturing confidence, which increased to 102 from 98 previously, while services confidence remained steady at 98. The movement brings business confidence closer to the long-term average of 100, a threshold not crossed since March 2023. According to INSEE, employment conditions have eased slightly, with the employment index dropping to 95 from 96 in November, primarily due to a downturn in the balance of future workforce size in the services sector. Meanwhile, there has been a significant rebound in the retail trade and motor vehicle repair sector, with the index rising seven points to 104, its highest since January 2024, attributed to improved ordering intentions. While this is a positive sign for the French economy, challenges such as political instability and inflation concerns persist. Domestic demand remains weak, prompting cautious optimism among businesses. Going forward, continuous monitoring of sentiment and broader economic conditions will be crucial.