France PMI October 2020


France: Composite PMI falls to five-month low amid surging new Covid-19 cases

November 4, 2020

The seasonally-adjusted IHS Markit Composite Purchasing Managers’ Index (PMI) decreased to 47.5 in October from September’s 48.5, marking the worst result in five months. Consequently, the index fell further below the 50-threshold that separates contraction from expansion in business activity, indicating a deteriorating economic backdrop.

October’s downturn came against surging new Covid-19 cases and was largely driven by a continued decline in activity in the services sector, where renewed coronavirus-restrictions hampered business conditions. Meanwhile, manufacturing output posted the fifth consecutive month of growth, albeit the pace of expansion slowed from September. Moreover, new orders contracted at a faster rate than in the month prior. As a result, firms lowered employment for the eighth month running, although the speed of job shedding moderated overall. Lastly, although firms remained optimistic over the business outlook for the year ahead, sentiment fell to the weakest level since May as expectations among services firms turned less positive.

Commenting on the reading, Eliot Kerr, economist at IHS Markit, noted:

“The results point to a worrying trend for business activity, showing that the recent surge in infections and the introduction of new restrictions have already negatively impacted the economy. Moving through the winter months, the downward trajectory is likely to persist, particularly as declines at service providers begin to spill over onto their manufacturing counterparts.”

FocusEconomics Consensus Forecast panelists see fixed investment growing 8.0% in 2021, which is down 0.5 percentage points from last month’s forecast. For 2022, the panel sees fixed investment growth at 4.0%.

Author:, Economist

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France PMI Chart

France PMI October 20 20 1

Note: Markit Purchasing Managers’ Index (PMI). Readings above 50 indicate an overall increase compared to the previous month, and below 50 an overall decrease.
Source: IHS Markit.

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