France: Composite PMI falls into contractionary territory in September
The seasonally-adjusted IHS Markit Composite Purchasing Managers’ Index (PMI) dropped to 48.5 in September from August’s 51.6. As a result, the index slid below the 50-threshold that separates expansion from contraction in business activity.
September’s downturn was driven by a contraction in activity in the services sector, as the rise of new Covid-19 infections hampered business conditions. Meanwhile, manufacturing output grew at a faster pace than in the previous month. Moreover, new orders declined for the first time since June and at the sharpest rate in four months. Subsequently, firms lowered employment for the seventh month running, with job shedding in the manufacturing sector outpacing that in the services sector. Lastly, firms in both the services and manufacturing sectors grew more optimistic about the business outlook for the coming 12 months in September.
Commenting on the reading, Eliot Kerr, economist at IHS Markit, noted:
“The impact of the recent outbreak was, however, felt very differently across the two monitored subsectors, with manufacturers posting a solid expansion in output and service providers recording a decline in activity. This is somewhat unsurprising given the client-facing nature of many service sector professions, but given the interdependence of two sub-sectors, we may see a slowdown in manufacturing in the months ahead.”