FRANCE DATA: Fresh Post-covid Low For INSEE Expected Employment

INSEE’s September sentiment survey saw expected employment fall to a fresh post-covid low of 93.2, down from 94.8 in August and 95.9 in July. Against a backdrop of continued political and fiscal uncertainty, businesses appear reluctant to increase hiring and this will continue to weigh on economic activity.

• Broader business sentiment was steady at 95.9 (vs 96.2 prior) in September, with declines in manufacturing and retail offset by increases in services and construction confidence. All sectoral indicators remain below the neutral 100 level, though.
• This morning, August retail sales showed a 0.9% Y/Y fall, the third consecutive negative reading, Incidentally, retail confidence fell to a 3-year low of 91.9 in September (vs 92.7 prior).
• France has been subject to mass protests in recent weeks (most recently yesterday), opposing the budget policies of ex-PM Bayrou. Our political risk team notes that new PM Lecornu has also been brought into the firing line, despite him rowing back on one of Bayrou's most controversial plans: the elimination of two public holidays, aimed as boosting growth and supporting businesses.
• The major challenge for Lecornu will come in presenting a work programme and passing a budget. The centre-left Socialist Party has set forward its demand: the imposition of the so-called 'Zucman tax, a 2% wealth levy on households worth EUR100mln+. While the imposition of such a measure may garner populist support on the left, it risks alienating the long-term allies of Macron's centrist alliance, the conservative Les  Republicains.