Business confidence in France edged up only marginally in June, rising by a single point to 94, still well below its long-term average. Most firms responded to the survey before the announcement of a Middle East peace agreement, but in an environment where energy prices on global markets had already started to ease.
Overall, the underlying details paint a rather concerning picture for France’s economic outlook. The modest improvement is largely attributable to retail, where sentiment is slightly less negative than in May (with the sub-index rising from 89 to 90), though still significantly below its normal level of 100. Meanwhile, business sentiment in services remains particularly weak and at its lowest since 2021, with deeply negative expectations across all sub-sectors, both household-facing and business-oriented. Industry, which had been the only real engine of French growth, is also showing signs of softening, with sentiment declining across sectors and returning to its average level. Firms, in particular, report a more pessimistic assessment of past production.
Perhaps most worrying is the continued deterioration in the labour market outlook. In June, the employment climate indicator fell by a further three points to its lowest level since 2013 (excluding the pandemic period). This suggests that job creation will remain insufficient in the coming months, with unemployment likely to continue rising, potentially approaching 8.5% by the end of 2026.
On prices, the survey indicates no further increase in selling price trends in June; if anything, prices edged down slightly in both services and industry.
PMI indicators, also released today, did improve in June but remain weak overall and still point to contracting activity, albeit at a slower pace than in May.