French Business Confidence Climbs Amid Global Tensions

French business confidence reached a four-month high in July, despite tensions from the U.S.-Israeli conflict with Iran and domestic heatwaves. Manufacturing confidence leads the rise, while supply-side constraints increase, particularly in services. Hotels anticipate a robust summer season, and retail sectors show strong gains in outlook and orders.

In July, French business confidence reached its highest point in four months, showing resilience amid the U.S.-Israeli conflict with Iran and record heatwaves, according to a Thursday report from the INSEE statistics agency.

The business survey showed the index rose to 97 points, signaling an upward trend since March, as manufacturing and retail sectors boosted the indicator. Manufacturing confidence increased with stronger outputs, despite conflict-related risks impacting oil prices and supply chains.

However, supply-side constraints remain a challenge, as 22% of firms face difficulties in securing inputs—the highest since late 2023. Meanwhile, the services sector shows increased confidence, and hotels report an uptick in demand, fueled by domestic customers escaping the heat.