- Prior 50.1
It's just a minor downgrade to the final estimate as France's manufacturing sector continues to stagnate in light of the Middle East conflict. The two biggest things to note are that suppliers' delivery times and input cost inflation both surged significantly on the month.
The former lengthened to its greatest degree since January 2023 while the latter saw a steep increase to its highest since December 2022.
Besides that, demand conditions also waned further with international customer demand seeing its steepest deterioration since July last year. That alongside an already weak domestic market sentiment.
HCOB notes that:
"The March PMI revealed an immediate impact from the war in the Middle East. The survey data, collected between 12-24 March, imply a rapid supply-side squeeze from the conflict as delivery times lengthened substantially and input costs soared. The passthrough to output prices appears to be fairly contained at this stage. This could be due to an unfavourable demand environment limiting French producers' pricing power, although firms may also be stalling price increases in the hope that there is a quick resolution to the war that brings with it a normalisation of supply and price conditions.
"The uncertainty from the war in the Middle East has also led clients to postpone or cancel orders, leading sales volumes to contract more sharply and production levels to decline for the first time in the year-to-date. Clearly, the longer this war is drawn out for, the greater are the chances of France's manufacturing sector slipping into stagflation."
