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France PMI April 2020

France: Private sector activity contracts at the sharpest pace in over two decades in April

The seasonally-adjusted IHS Markit Flash Composite Purchasing Managers’ Index (PMI) plunged to 11.2 in April, eclipsing March’s 28.9 and marking a new all-time low in 22 years of data collection. Thus, the index fell deeper below the 50-threshold that separates contraction from expansion in business conditions.

April’s dismal result reflected plummeting output at manufacturers and service providers, with the latter registering a sharper decline, as Covid-19 ravages demand. New business dropped faster than in March in both sectors amid tumbling domestic and export orders. As a result, the rate of job shredding was the quickest in the series’ history, with manufacturers cutting jobs quicker than service providers. Meanwhile, input prices fell at the sharpest rate in over a decade, partly thanks to cheaper oil, while output prices declined for a second month in a row. Lastly, the one-year business outlook was the most pessimistic since data collection began in July 2012.

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

“Going forward, there are two key areas of focus. Firstly, how quickly will measures be lifted as the gradual easing of restrictions begins on the 11th of May? This will give the clearest indication on how fast we can expect activity to recover in the short term. Secondly, will the easing of restrictions lead to a second outbreak of the virus? If so, any remaining hopes of a so-called ‘V-shaped’ recovery will vanish.”

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