France October flash services PMI 46.1 vs 44.6 expected

  • Prior 44.4
  • Manufacturing PMI 42.6 vs 44.4 expected
  • Prior 44.2
  • Composite PMI 45.3 vs 44.4 expected
  • Prior 44.1

It is a bit of a contrast as the French services sector contracts at a slower pace in October, beating estimates, while the manufacturing sector slumped further to a 41-month low. At the balance, it still sees the French economy improve slightly to start Q4 but it’s not entirely optimistic. HCOB notes that:

“The French economy is still feeling the heat at the start of the fourth quarter. While services business activity shrank at a
slower pace than the month before, the manufacturing sector fell deeper into contraction in October. Our GDP nowcast
model, with PMI figures in the mix along with a bunch of other indicators, is pointing to fractional growth in the fourth quarter.

“The services sector is hitting roadblocks. Even though the corresponding HCOB PMI for business activity signalled a softer
decline, new orders both overall and from abroad reduced further, while employment growth continued to slow. Lower
demand also led to a faster reduction in backlogs of work, which will further limit activity gains in the coming months.

“Things are going south in the manufacturing sector, and there is no relief in sight. In fact, manufacturing output fell by its
greatest margin since May 2020, reportedly due to subdued demand conditions. Manufacturers’ expectations for the next
twelve months worsened conspicuously, with the corresponding index falling to the lowest level in three-and-a-half years.
Factory pessimism was also reflected in the employment PMI, which fell to its lowest level since May 2020.

“Price indices are in perilous territory. The pace of increase in input prices rose for the second month in a row amid rising
fuel prices and reports of sustained wage pressures. Although the increase in output prices slowed slightly, accelerated input
price inflation could lead to higher output charges. Higher inflation rates would put the European Central Bank into a difficult
position as it more or less signalled at its last meeting that no further rate hikes will be carried out.”


توسط رضا خانتاراج

رضا خانتاراج