The latest survey by the Banque de France sheds some interesting light on the tensions in the industry and the risk of a sustained rise in inflation. It is reasonable to assume that this situation is shared by many countries.
At first sight, this September survey is worrying since it shows a deterioration of the business climate in industry.
In reality, this is essentially due to a drop in activity in the automobile sector, due to supply constraints.
56% of industrial companies experienced supply difficulties in September compared to only 51% in August. 53% also experienced recruitment difficulties, compared to 50% in August. The trend is up sharply from 37% in May.
As order books remain particularly full, stocks are at historically low levels.
Input prices are trending at historically high levels. Companies are squeezing their margins, but selling prices are also rising significantly.
According to the Banque de France, the general level of activity continued to rise in September and GDP growth was 2.3% qoq in Q3. A further increase is expected in October which would bring GDP to only 1/2 point of its pre-crisis level.
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