France PMI July 2020


France: Private sector activity at two-and-a-half year high on further reopening in July

July 28, 2020

The seasonally-adjusted IHS Markit Flash Composite Purchasing Managers’ Index (PMI) rose to 57.6 in July, after June’s 51.7. Therefore, the index rose further above the 50-threshold that separates expansion from contraction in business conditions and logged the highest print since January 2018.

July’s improvement reflected upbeat output in both the services and manufacturing sectors as well as the first increase in new orders since the lockdown began in March. That said, employers continued to cut their staff numbers, although the pace of job shedding was the softest in five months. Meanwhile, input prices rose for the second consecutive month, prompting firms to raise output prices as a result. Finally, French businesses grew more optimistic regarding the one-year outlook on hopes of an economic recovery following the loosening of social distancing measures.

In view of March’s developments, Eliot Kerr, Economist at IHS Markit, noted:

“The July PMI figures pointed to strong growth in French private sector business activity, confirming that the economy has entered its recovery phase following the COVID-19 lockdown. […] Going forward, a steady rebuilding of demand should give businesses the confidence to start hiring more staff and this will further aid the economy in returning to pre-coronavirus levels of output.”

FocusEconomics Consensus Forecast panelists are still assessing the latest developments see fixed investment contracting 9.7% in 2020, which is unchanged from last month’s forecast. For 2021, the panel sees fixed investment growth at 6.7%.

Author: Massimo Bassetti, Senior Economist

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France PMI Chart

France PMI July 20 20 0

Note: Markit Purchasing Managers’ Index (PMI). Readings above 50 indicate an overall increase compared to the previous month, and below 50 an overall decrease.
Source: IHS Markit.

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