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France PMI August 2021

France: PMI falls in August, but remains comfortably within expansionary territory

The IHS Markit Flash Purchasing Managers’ Index (PMI) fell to 55.9 in August from 56.6 in July, marking the lowest reading in four months. However, the index still remained well above the 50-threshold, signaling an improvement in business conditions from the previous month—albeit pointing to waning moment in private sector activity.

August’s reading largely reflected a softer expansion in new orders—the softest since April. That said, growth in new business was still marked, amid robust client demand at home and abroad on the back of softer Covid-19 curbs and improved tourist activity. Against this backdrop, job creation grew at the quickest pace since October 2018, with firms in both services and manufacturing sectors raising their headcounts compared to the prior month.

On the price front, input cost inflation somewhat softened. However, persisting supply shortages and logistics disruptions, kept input cost inflation elevated, notably in the manufacturing sector. This, prompted firms to hike their selling prices in a bid to protect their margins. Lastly, although firms remained optimistic with regards to output in the 12 coming months, business sentiment deteriorated to a seven-month low.

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