- Prior 45.4
It is a marginal revision lower as the French manufacturing sector slumped further in July. Of note, production, new orders and employment all decreased at faster rates. Besides that, input cost inflation accelerated further to its highest in a year-and-a-half. HCOB notes that:
"French manufacturing isn’t recovering soon. In July, the headline HCOB PMI fell to 44.0, with demand dropping significantly both domestically and abroad, and especially in the investment goods sector. Overall, the situation doesn’t look too good for the French manufacturing sector, leading our nowcast to predict a 1% contraction for the third quarter.
"The French manufacturing downturn was broad-based in July. Each sub-sector – investment, intermediate and consumer goods – fell, with investment goods turning down at the fastest pace. Accordingly, business confidence for the coming twelve months was the most downbeat in the investment goods sector, while prices charged for capital goods decreased despite mounting cost pressures.
"French manufacturers are feeling less optimistic about the future. The corresponding index fell below its historic average and was only slightly above the positive 50 level. This marked a considerable turnaround given business confidence recovered to a 27-month-high as recently as May. French manufacturers cited fewer orders from the construction sector and lower client numbers as reasons for pessimism. As a result, the employment situation deteriorated with manufacturers bracing for tougher times ahead.
"Input prices in the French manufacturing sector are heating up again. Input price inflation accelerated to the highest level in 18 months, with the corresponding index increasing by almost five points. According to manufacturers, this increase was due to greater price rises from suppliers and higher raw material costs. Although manufacturers raised selling prices in July to offset higher input prices, the uplift surprisingly slowed compared to June, hinting at difficulties passing on costs to clients."
