France: Composite PMI records worst reading since February 2021 in June
The HCOB Flash Composite Purchasing Managers’ Index (PMI) came in at 47.3 in June, down from May’s 51.2. June’s result marked the worst performance since February 2021. As a result, the index dropped below the 50.0 no-change threshold, signaling a deterioration in private sector operating conditions from the previous month.
The downturn in the composite index was broad-based: The manufacturing PMI ticked down to 45.5 in June from May’s 45.7, while the services PMI dropped to 48.0 from 52.5 in May. Notably, activity in the services sector declined for the first time since January, which pushed the composite reading into contractionary terrain.
June’s print came on the back of a sharper decline in demand, with firms reporting weaker foreign demand as a key concern. Consequently, new orders dropped, which translated into lower output levels in both sectors amid persistent inflationary pressures, tighter financing conditions and competition. Additionally, business confidence weakened amid concerns over the demand outlook and financial conditions.
More positively, both input and output inflation eased; the manufacturing sector spearheaded the downtrend due to lower raw material prices. Moreover, employment in the private sector grew in June thanks to services firms increasing their workforce numbers. Meanwhile, manufacturers reduced their headcount slightly.