France: PMI suggests solid private-sector momentum in August
August 23, 2018
In August, the IHS Markit flash composite Purchasing Managers’ Index (PMI) rose to 55.1 from 54.4 a month earlier. As a result, the index climbed further away from the 50-point threshold that separates expansion from contraction in business activity in the services and manufacturing sectors. Moreover, the rate of expansion in August exceeded the series’ long-run average of 53.9, suggesting solid economic momentum across the private sector.
August’s gains reflected strong expansions in both the services and manufacturing sectors. In the services sector, new orders drove the print, while solid homegrown demand led gains in the manufacturing sector. Manufacturers also noted an uptick in export demand, although it was marginal. Across both sectors, capacity constraints pushed up backlogs of work, which led firms to increase staff levels. Meanwhile, output price inflation accelerated in the manufacturing sector as input costs rose on higher energy prices. In turn, optimism among firms fell to a nearly two-year low as inflation ate into manufacturers’ margins.
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%.