France: Composite PMI rises to over two-year high in July
The seasonally-adjusted IHS Markit Composite Purchasing Managers’ Index (PMI) rose to 57.3 in July, after June’s 51.7, marking the best reading since January 2018. As such, the index climbed further above the 50-threshold that separates expansion from contraction in business conditions.
July’s upturn came on the back of upbeat output in both the manufacturing and services sectors as activity continued to recover from the coronavirus induced lockdown. Moreover, new orders rose for the first time since March, largely reflecting healthy sales in the service sector. Despite this improvement, firms continued to shed jobs in July, albeit at a softer pace compared to the previous month. Lastly, confidence among French businesses rose to a five-month high, as firms grew more optimistic about the outlook for the coming 12 months.
Commenting on the reading, Eliot Kerr, economist at IHS Markit, noted:
“July PMI data showed the kind of recovery we have been expecting since the easing of lockdown restrictions first began. Both manufacturers and service providers posted sharp expansions in activity following the dire conditions they have experienced in recent months. The latest figures add weight to the argument that economic growth should return in the third quarter, which will represent the first green shoots in the recovery after contractions in both the first and second quarter. With the reduction in GDP between April and June expected to be well into the double-digits, growth could not come sooner, as it will prevent the French economy from losing more ground and allow activity to rebuild towards pre-coronavirus levels.”