French architecture in France

France PMI August 2020

France: Private sector activity eases in August

The seasonally-adjusted IHS Markit Flash Composite Purchasing Managers’ Index (PMI) eased to 51.7 in August, from 57.3 in July, which had marked the best reading over two years. However, the index remained above the 50-threshold that separates expansion from contraction in business conditions.

August’s print reflected softer activity in both the manufacturing and the services sectors compared to the previous month amid slower growth in new orders. As such, firms continued to shed jobs in August and at a slightly quicker pace compared to July. On the price front, input cost inflation rose at the fastest rate since January amid higher prices for air freight and hygiene products, with the services sector experiencing the sharpest increase. Moreover, output charges rose for the first time since before lockdown measures were introduced in March. Lastly, although French businesses remained positive regarding the 12-month outlook, they were slightly less optimistic than in the previous month as they remained cautious of further coronavirus outbreaks.

Commenting on the reading, Eliot Kerr, economist at IHS Markit, noted:

“The latest PMI data pointed to a slower rise in activity across the French private sector during August. Following the sharp expansion registered in July, growth momentum has somewhat stuttered, with the expansion in new orders slowing to a snail’s pace as manufacturers fell back into contraction territory. Meanwhile, there was a reacceleration in the rate of job cutting after three months of successive easing. Overall, the results highlight the fragility of demand conditions faced by French businesses and cast further doubt over the V-shaped recovery that many had hoped for.”

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