France: Private sector activity rebounds in June on reopening hopes
The seasonally-adjusted IHS Markit Flash Composite Purchasing Managers’ Index (PMI) rose to 51.3 in June, after May’s 32.1. Therefore, the index rose above the 50-threshold that separates expansion from contraction in business conditions, after four months of steeply negative prints.
June’s improvement reflected upbeat output in both the service and manufacturing sectors and the softest decline in new orders since the lockdown began in March. That said, employers continued to cut their staff numbers as demand remains subdued and prospects dire. Meanwhile, input prices rose for the first time in four months, while output prices declined as firms resorted to discounts to retain clients. Finally, French businesses turned 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 latest PMI data suggests that France is finally entering a period of recovery as we move past the peak of the coronavirus crisis. The further loosening of restrictions has allowed some semblance of normality to resume, with many businesses and workers returning to work, particularly in the manufacturing sector. Barring any large scale second outbreak, demand should also follow activity into expansion territory, as confidence continues to recover. Given ongoing cross-border restrictions in many countries around the world, this will most likely be driven by the domestic market in the short-run, with international demand taking a little longer to recover.”