According to the most recent data from The Conference Board (TCB), the French economy seems to be encountering a series of headwinds. The leading economic index (LEI) for France experienced a decline, dropping by 0.3% in January this year to a level of 112.5. This decline follows a similar 0.3% fall observed in December 2023.

The LEI, which serves as a forward-looking indicator aimed at predicting future economic activity, has contracted by 1.5% from July 2023 to January 2024. This contraction marks a significant reversal from the modest 1% growth seen in the prior six months.

Furthermore, the Coincident Economic Index (CEI) for France, reflecting current economic activity, also displayed indications of weakness. 

In January 2024, the CEI experienced a slight decline of 0.1% to a level of 110.9, essentially counterbalancing a 0.1% increase recorded in December 2023.

However, despite this decline, the CEI managed to grow by a marginal 0.1% from July 2023 to January 2024, albeit at a slower pace compared to the 0.3% rise recorded in the previous six-month period.

“The France LEI fell again in January, marking the seventh consecutive monthly decrease,” stated Allen Li, associate economist at The Conference Board. 

“The January slide was due primarily to a negative contribution from the yield spread, while most other components held relatively steady, and unemployment claims had a mildly positive contribution. Moreover, on a six-month basis, the decline was concentrated on only three out of seven underlying components.”

Li went on to add: “As a result, the January LEI, while still growing well below trend, did not signal an impending recession in France. The Conference Board currently expects real GDP growth for France to remain weak in the first half of 2024 and only reach 0.7% annual growth in 2024 after 0.9% in 2023.”