France: Private sector activity softens in December
January 6, 2020
The seasonally-adjusted IHS Markit Flash Composite Purchasing Managers’ Index (PMI) ticked down to 52.0 in December from 52.1 in November. Nevertheless, the index remained above the 50-threshold that separates expansion from contraction in business conditions.
December’s marginal slip reflected easing activity in the manufacturing sector, while activity in the service sector remained mildly upbeat. Manufacturers reported that production broadly stagnated amid a decline in new orders, while service providers saw both output and new orders rise amid stronger external demand. Despite the milder overall activity, companies continued to increase their staff levels. Finally, although business confidence eased to a six-month low, it remained in optimistic terrain.
In view of December’s developments, Eliot Kerr, economist at IHS Markit, noted:
“The French service sector ended 2019 with a slightly quicker rise in business activity. The result locked in a solid rate of output expansion for the final quarter of the year, which was supported by strong new order growth throughout. Faster headline growth at service providers helped offset stuttering manufacturing production and ensured the pace of expansion in composite activity was little-changed from November. Taking into account PMI results from the final three months of the year, the data point to economic growth of approximately 0.4% in the fourth quarter."