France: Decline in private sector activity softens in December
December 16, 2020
The seasonally-adjusted IHS Markit Flash Composite Purchasing Managers’ Index (PMI) rose to 49.6 in December from November’s 40.6, which had marked a six-month low. Consequently, the index remained—although moving closer to—the 50-threshold that separates contraction from expansion in business conditions.
December’s reading largely reflected a softer decline in output among services sector firms, while production in the manufacturing sector logged an expansion. Moreover, new orders rose for the first time in four months in December, hinting at improving demand conditions, particularly in the services sector. As a result, firms raised employment levels in December, marking the first rise in employment levels since before lockdown measures to control the pandemic were implemented back in March. On the price front, input cost inflation accelerated to a four-month high amid raw materials shortages. Meanwhile, French firms continued to cut output charges, albeit at a softer pace than in the previous month. Lastly, businesses’ turned notably more optimistic in December, with confidence reaching the highest level in nearly a year as firms believed demand would pick up when Covid-19 vaccines would become available.
Author: Hanna Andersson, Economist