France: Flash composite PMI increases in January
The IHS Markit flash composite Purchasing Managers’ Index (PMI) ticked up from a revised 59.6 points in December (previously reported: +60.0 points) to 59.7 points in January, marking one of the sharpest rates of expansion in the survey’s history. The print, which exceeded market expectations of a drop to 59.4 points, marked the nineteenth consecutive month in which the PMI was above the 50-point threshold that separates expansion from contraction in business activity.
January’s increase was supported by sharp expansions in the manufacturing and service sectors. Output growth in the manufacturing sector nonetheless moderated from the previous month due to a lower volume of new orders. In contrast, output among service providers accelerated markedly, recording the sharpest expansion in over six and a half years. Staffing levels increased in the surveyed month, marking the fifteenth consecutive month of expansion in employment. Despite higher employment, backlogs of work increased at the fastest pace since April 2011, and the rise was notable in the service sectors. Regarding price developments, input prices rose at the fastest rate in over six years due to higher prices for raw material and staffing. As a result, output prices rose on average as firms passed on higher costs to clients.
Commenting on January’s figure, Alex Gill, Economist at IHS Markit, said:
“The French private sector economy started 2018 where it left off last year, with the headline flash composite output PMI figure remaining among the highest recorded in the survey’s near 20-year history.”