France: PMI falls in July, but private sector activity growth remains strong nonetheless
July 23, 2021
The IHS Markit Flash Purchasing Managers’ Index (PMI) fell to 56.8 in July from June's 57.4, marking the lowest reading in three months. That said, the index still remained comfortably above the 50-threshold, signaling an improvement in business conditions from the previous month—albeit pointing to a moderation in private sector activity at the start of Q3.
July’s print largely reflected a loss of momentum in new order growth compared to the previous month, albeit it still new business still expanded at one of the sharpest rates in over three years. Output, meanwhile, grew robustly in the month, with activity particularly upbeat in the services sector amid the loosening of restrictions. Moreover, firms raised staff levels across both sectors, albeit at a slower pace than in the previous month. On the price front, input cost inflation rose to the highest level in over a decade amid continued supply chain issues, especially in the manufacturing sector. As such, firms continued to pass on costs to clients, leading output charges to increase, albeit at a slower rate than in June. Lastly, sentiment in the private sector weakened to a four-month low in July, largely owing to worries over input shortages.
Author: Hanna Andersson, Economist