Les industriels redoutent des difficultés de production.

Business leaders pessimistic about their business prospects

Posted on September 22, 2022 at 10:23Updated on September 22, 2022 at 16:17

As the outlook darkens for the French economy, the morale of business leaders weakens. The business climate lost 2 points in September, INSEE said on Thursday. However, at 102, the indicator remains slightly above its long-term average of 100.

With the exception of construction, all sectors participated in the decline, confirming the slowdown in economic activity in France. Between the uncertainties about the evolution of the conflict in Ukraine, its exploding costs, the threat of power cuts and energy rationing this winter, employers are concerned about their prospects. Even in the services sector, which benefited from a glorious summer season thanks to the return of foreign tourists to France and where the weather remains at a high level (106).

production difficulties

The mood is darker in retail. By falling to 96, the index is moving away from its long-term average. After a small rebound in August, traders fear the consequences of inflation on household consumption. Reflecting its pessimism about the evolution of its activity, “order intentions are falling drastically and are at their lowest level since November 2020,” says INSEE.

In industry, too, morale grows increasingly pessimistic. The index fell just 1 point in September, but many warning lights went off warning of a more tense situation.

As in previous months, business leaders are pessimistic about their order books. Although down slightly, inventories also grew. This means that they will have to be sold, and this, at a time when the demand, national and international, is slowing down.

Beyond that, it is the production difficulties that are of concern. The INSEE survey certainly confirms a stabilization of supply difficulties, at a high level. But as energy bills skyrocket in many sectors, manufacturers fear they may have to curtail production, or even shut it down for the winter. Anxiety is perceptible in the most exposed sectors such as the chemical, metallurgical, wood-paper industry or even the plastic and rubber industry.

One in ten ETI is ready to stop producing

“Energy has become the main source of our setbacks,” said Christophe Beaux, CEO of Medef. In Tuesday’s hearing with the leaders of other employer organizations in the Senate delegation to business, he warned in particular about the “possible cascading effects” of a shutdown of the production tool. “In the short term, the situation is not so bad for most companies. But the prospects for the second half and for the future are dramatic, ”he warned.

According to the co-chairman of the Movement of medium-sized enterprises (Meti), Frédéric Coirier, the slowdown in activity is already perceptible. “The volumes transported in France have decreased. We produce less, but that is not seen in the billing of companies due to inflation”. And the worst is yet to come. “The industry is at an incomparably higher level of stress than other sectors. One ETI out of ten declares that it will stop producing”, he indicated.

At Meti and CPME, we see that companies are struggling to pass on rising costs. Without a mechanism to limit energy prices, “France is threatened with a new wave of deindustrialization like in 2008”, warns Frédéric Coirier.

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