- Prior 49.8
- Manufacturing PMI 48.1 vs 50.1 expected
- Prior 50.4
- Composite PMI 48.4 vs 49.7 expected
- Prior 49.8
Trouble, trouble as the French economy starts to see renewed signs of weakness after the summer with business activity falling at its quickest pace in five months. Domestic demand conditions remain subdued with new orders once again falling on the month, marking a 16th straight month of decline. The good news at least is that employment conditions held up while price pressures cooled slightly. As it stands, France is now the bad egg of the European economy. HCOB notes that:
“After signs of stabilization in the French private sector over the summer months, the September data has brought a sobering reality check. Economic activity in France has weakened more sharply than at any point since April. Output has declined in both manufacturing and services, with the respective index for manufacturing falling to its lowest level in seven months. Overall, the composite index has been below the growth threshold for over a year, underscoring the country’s subdued economic prospects. We expect GDP growth rates to be between 0.5 and 1 percent in both 2025 and 2026, with the increasingly tense domestic political situation likely to have a negative impact on household consumption and investment decisions.
“The positive momentum in manufacturing that we observed in August has dissipated in September. The Manufacturing PMI has slipped back below the growth threshold and it is particularly notable that demand-side sub-indices have deteriorated. Production volumes have declined significantly and new orders have also taken a hit. Whether this means the medium-term trend toward stabilization has ended remains to be seen. Forward-looking indicators, such as quantity of purchases, new orders and future business expectations do not suggest any major improvements in the coming months.
“The service sector has also suffered a setback. Although cost pressures in the service sector have eased, providers have also lowered their final prices, likely due to persistently weak demand. This is reflected in reduced workloads and a drop in hiring. So far, real wage gains – which should in theory lead to increased household consumption – have not yet translated into a revival of demand. This situation is likely to persist as long as the political deadlock continues.”
