- Prior 44.2
France's manufacturing woes continue to deepen to start Q3 with the steepest drop in new orders since 2009 - that is if you take out the pandemic-hit months. Meanwhile, business confidence has also plunged to a three-and-a-half year low. HCOB notes that:
"France’s manufacturing sector is in deep trouble. According to the HCOB PMIs, output contracted in October for the seventeenth month running. New orders overall and abroad meanwhile deteriorated at the steepest pace since March 2009 outside of pandemic-hit months. Employment is on a sharper downward slide than in September, with the respective PMI closing in on early-2020 levels. Unsurprisingly, our nowcast suggests that the manufacturing sector is likely to hit a rough patch in the fourth quarter.
"Feeble demand is noticeably weakening the French manufacturing sector. Due to low new orders overall and abroad, backlogs of work are clearing at the fastest rate since early 2020.
"The manufacturing sector is in for a bumpy ride ahead. Manufacturers turned even more pessimistic in October, with growth expectations reaching an all-time low outside of pandemic-hit months. The companies surveyed cited demand deterioration as the main reason for the drop in expectations. With the rapid interest rate increases yet to have their full impact on demand, given the lag this effect typically has, pessimism could spread even further.
"The fight against inflation is far from being over. The input and output prices PMIs rose for the second consecutive month in October, suggesting some price pressures are building again within manufacturing. Even though both input and output prices still dipped overall in October, the odds of prices going up soon are climbing. This is partly because of the Middle East crisis and the chance of oil prices jumping up again."
