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France: Composite PMI improves notably in December, but falls short of crossing to expansion territory

December 16, 2014

The composite Purchasing Managers’ Index (PMI) elaborated by Markit improved in December, rising from a revised 47.9 in November (previously reported: 48.2) to 49.1. Despite the notable improvement, the composite PMI still sits below the 50-threshold that separates contraction from expansion in business activity. December’s result marked the highest level in four months and, according to Markit, the reading, “pointed to only a marginal rate of decline overall.”

The improvement observed in December reflected the fact that services providers reported a slower decrease in business activity, which offset a fall in manufacturing activity—the sharpest since August. According to Markit, “growth was centered on the service sector,” whereas “new orders continued to fall in the manufacturing sector.” On prices developments, firms reported that although input prices continued to increase in December, output prices are still falling.

Markit concluded that, “[t]he French private sector economy remained in contraction in the final month of 2014, as has been the case since May. […]. Services companies were boosted by a slight rise in new business for the first time in four months, while expectations of further gains in new work in coming months boosted their confidence regarding the year-ahead outlook. The performance of the manufacturing sector remained a concern, however, as output fell at a sharper rate amid reports of continued weak demand and strong competitive pressures.”

FocusEconomics Consensus Forecast panelists see fixed investment contracting 0.1% in 2015, which is unchanged from the previous month’s estimate. For 2016, the panel expects fixed investment to rebound and expand 1.6%.


Author:, Senior Economist

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France PMI December 2014

Note: Markit Purchasing Managers’ Index (PMI). A reading above 50 indicates an expansion in business activity while a value below 50 points to a contraction.
Source: Markit.


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