France: Private sector activity falls at quickest rate in three months in February
February 19, 2021
The seasonally-adjusted IHS Markit Flash Composite Purchasing Managers’ Index (PMI) fell further in February, dropping to a three-month low of 45.2, which was down from January’s 47.7. Consequently, the index remained mired below the 50-threshold that separates contraction from expansion in business conditions.
February’s downturn largely owed to the Covid-19 containment measures, which continued to hamstring economic activity. The decline in the services sector was the fastest since November 2020. Meanwhile, manufacturing output logged a modest expansion. Moreover, new orders contracted at the fastest clip in three months, with the decline driven solely by the services sector amid depressed demand conditions in the domestic market. Despite this, firms in both sectors raised employment in February. On the price front, input costs increased in the month due to higher input costs in the manufacturing sector amid shortage of inputs and delays in deliveries. That said, firms continued to cut their output charges in the month, particularly in the services sector. Lastly, businesses remained optimistic over the outlook for the coming year in February, with confidence rising to the strongest in over two-and-a-half-years amid hopes of a rebound in demand later in 2021.
Author: Hanna Andersson, Economist