The slump set in very quickly
In France, INSEE published a first estimate of current activity acrossvarious sectors, together with its monthly business climate survey. The monthly survey ended on 23 Marchbut the institute points out that the last week was poorly represented in the total sample, with only a few responses via the internet. Many respondents were already unavailable. The survey figures are therefore partial, and biased towards the first two weeks of March, so we will have to wait for the April results to have a more precise idea of the fall in economic sentiment during the crisis.
INSEE has therefore, for the first time, used new methods, many of them qualitative, to estimate the loss of activity by sector during the first week of lockdown, as well as the loss of demand by sector of activity. Both approaches (production and expenditure approaches) point to an economy operating at 65% of capacity.
They may be partial, but these are awful figures nevertheless. Business climate collapsed by 10 points in March, the largest drop since the survey was first conducted in 1980, and one point more than at the start of the financial crisis in October 2008. The declines are stronger in services and retail sales than inindustry (where the impact still seems limited - Chart 1). Similarly, in the building sector, which has since come to a virtual standstill, the indicator has remained above its long-term average, reflecting the situation at the beginning of March. In services, the drop in business confidence reflects the message given earlier this week by the PMI indicators, where the services indexfell to an all-time low of 29(Graph 2).
Originally posted here:
France: An economy in shock - ING Think
