- Prior 50.4
This just reaffirms a setback to the tentative recovery during the summer for France's industrial sector. Demand conditions remain weak and that's biting at overall business activity once again as we close out Q3. HCOB notes that:
"After tentative signs of recovery in August, September brought a sobering reality for France’s manufacturing sector, as reflected in the HCOB PMI. The decline in the headline index was primarily driven by a sharp drop in output, which in turn stemmed from deteriorating demand conditions. New orders weakened, particularly in the investment goods sector. This sector likely serves as a bellwether for broader economic sentiment, suggesting that rising political uncertainty is increasingly weighing on both consumer and investment activity.
"Surprisingly, hiring activity among French manufacturers remains positive. Although the pace of recruitment has slowed, the employment index has stayed in expansion territory for five consecutive months. However, this should not obscure the fact that many of the new hires appear to be temporary, according to survey responses, indicating that companies remain cautious when it comes to long-term employment decisions. This caution is understandable given the ongoing uncertainty surrounding international trade, the strength of the euro, and political instability. Meanwhile, backlogs of work have declined for the fourth month in a row.
"Faced with weak order volumes and intense competitive pressure, companies are responding by offering price discounts. While this may help support demand in the short term, it is likely to squeeze profit margins, especially as input costs are edging up slightly. The combination of subdued demand, rising costs, and pricing pressure underscores the challenging environment manufacturers are currently navigating. In this context, it is hardly surprising that companies are growing less optimistic about the future, as indicated by a drop in the future output index."
