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Business confidence 94 vs 94 expectedPrior 94Services confidence 93Prior 94Industrial confidence 102Prior 100The French business climate remains gloomy, with yet another drop in services confidence as dark clouds continue to circle amid the Middle East crisis. The unrevised estimate reflects a drop to 93.6, marking the lowest such reading since February 2021. That as we also continue to see overall business confidence continue to keep below the long-term average of 100.Besides that, there was also a marked drop in the climate for the retail trade sector. The estimate there fell to 89 in May, down from the 94 reading in April. If you exclude the pandemic, that is the weakest such reading since June 2013. And that continues to mark a sharp deterioration in demand conditions and the general sales environment.This comes as the expected selling prices index shoots up again to 14.5%, its highest since June 2023.At the same time, employment conditions also worsened in the latest survey with the climate index here falling to 91.7. That is the lowest such reading since March 2021 and if not September 2013 if you want to exclude the pandemic period.All of this just adds to the worsening outlook for the French economy, as also highlighted by the PMI data yesterday here.After a slight period of recovery and resilience to start the year, it is now back to the drawing board for France as economic conditions worsen considerably due to the Middle East conflict. And adding to that is continued worries about the fiscal situation, not least with rising bond yields not helping now.
This article was written by Justin Low at investinglive.com.
💡 DMK Insight
French business confidence is slipping, and here’s why that matters for traders: With services confidence dropping to 93.6, the lowest level in recent memory, traders should be wary of potential ripple effects across European markets. This decline indicates a broader economic malaise, likely exacerbated by geopolitical tensions in the Middle East. Such uncertainty can lead to volatility in the Euro and related assets, especially if the situation escalates. Look at how this could impact trading strategies—if you’re holding positions in European equities or the Euro, consider tightening your stop-loss orders. The industrial confidence reading at 102, while slightly better than expected, still suggests that manufacturers are not immune to the overall downturn. Keep an eye on correlated assets like the Euro/USD pair, which may react sharply to further negative sentiment. Watch for key support levels around 1.05 in the Euro, as a breach could trigger a wave of selling. The next few weeks will be crucial; monitor any updates from the region that could sway investor sentiment further.
📮 Takeaway
Watch for Euro/USD support around 1.05; a break could signal increased selling pressure amid declining French business confidence.
