France: Composite PMI drops to six-month low in November
December 3, 2020
The seasonally-adjusted IHS Markit Composite Purchasing Managers’ Index (PMI) dropped to 40.6 in November, from 47.5 in October, marking the worst reading since May. Consequently, the index dropped further below the 50-threshold that separates contraction from expansion in business conditions, pointing to a deteriorating economic backdrop.
November’s reading was chiefly driven by declining output in the services sector amid the reimposed Covid-19 lockdown measures. Moreover, activity in the manufacturing sector fell for the first time in six months; however, the decline was moderate overall. Furthermore, new orders dropped sharply in both sectors as demand conditions deteriorated. With regard to employment, French firms cut staff levels for the ninth month straight in November amid muted demand conditions; however, the pace of job shedding eased compared to the previous month. Lastly, while firms remained optimistic with regards to the business outlook for the coming twelve months, confidence was historically subdued.
Author: Hanna Andersson, Economist