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France: Composite PMI moderates slightly in January and remains entrenched in contraction

January 23, 2015

The composite Purchasing Managers’ Index (PMI) elaborated by Markit deteriorated in January, inching down from a revised 49.7 in December (previously reported: 48.2) to 49.5. With January’s result, the composite PMI remained below the 50-threshold that separates contraction from expansion in business activity for nine consecutive months. According to Markit, January’s drop “pointed to a further marginal decline in private sector activity.”

The deterioration observed in January reflected the fact that services providers reported a slight drop in activity, which reversed the marginal increase reported in December. In addition, manufacturers reported yet another decline in activity in January, although less pronounced than in December. Markit reported new business at French private sector firms increased for the second consecutive month. However, French manufacturers reported a drop in new export orders. Regarding employment, businesses cut staff for the 15th consecutive month. On price developments, firms continued to report a fall in output prices and reported the first fall in input prices in the last 20 months.

Markit concluded that, “[F]rance’s private sector economy continued to struggle at the beginning of 2015, posting another slight drop in output. This reflected a faltering performance from the service sector, which slipped back into contraction, offsetting a notable easing in the manufacturing sector’s downturn.”

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 Chart


France PMI January 2015

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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