France: Flash composite PMI recovers in June
June 22, 2018
The IHS Markit flash composite Purchasing Managers’ Index (PMI) rose from 54.2 in May to 55.6 in June. The indicator remained above the 50-point threshold that separates expansion from contraction in business activity, and the rate of expansion in June exceeded the long-run series average of 53.9 points.
June’s print reflected an expansion in both the manufacturing and service sectors. Services grew robustly on the back of higher new work volumes, while manufacturing recorded the slowest expansion in over a year and a half. Capacity constraints were evident in both sectors despite the hiring of new staff. Backlogs of work increased due to high demand volumes and lack of available resources. Regarding price developments, output prices rose as firms passed on higher costs for inputs to clients.
Commenting on the June figure, Paul Smith, Economics Director at IHS Markit, said:
“Whilst the services economy strengthened on the back of increased market activity, manufacturers faced a number of headwinds including a general loss of external demand momentum, ongoing vendor delivery delays and rising price pressures, especially for metals (in part linked to higher tariffs).”
France Fixed Investment Forecast
FocusEconomics Consensus Forecast panelists see fixed investment growing 3.0% in 2018, which is up 0.2 percentage points from last month’s estimate. For 2019, the panel sees fixed investment expanding 2.6%.