The geopolitical situation and the vertiginous increase in energy and prices weighed heavily on private activity in France in October. The Flash PMI Composite Index of Global Activity fell to 50.0 in October from 51.2 in September, a 19-month low. An index below 50 means activity is contracting, above it is expanding.
The services activity index fell to 51.3 in October (52.9 in September), a two-month low, while the manufacturing production index recovered to 44.2 in October (43.3 in September), a maximum of two months. The manufacturing industry index was broadly stable at 47.4 in October (47.7 in September), a 29-month low.
“The data shows a stagnation of the French economy in October after a period of continuous expansion that began in April 2021, when health restrictions were lifted. This stop in growth was due to a further weakening in demand, the increase of prices and a growing lack of financial support. the visibility has deterred customers from placing orders, as evidenced by the third consecutive monthly decline in new business,” a statement read.
“The landscape is darkening”
“In fact, inflationary tensions have remained high. At the same time, the outlook for activity has receded, registering its lowest level in almost two years,” continues S&P Global.
Good news, however, on the employment front, where the current expansion period has been extended to 22 months. The job creation rate was also high and well above its average.
“As very high inflation erodes customers’ purchasing power, borrowing costs rise and uncertainty mounts, the outlook darkens in the euro zone’s second-largest economy. According to PMI data, the situation has continued deteriorating from the second quarter in the French manufacturing sector, which also remained firmly anchored in the contraction zone in October. Finished goods from French manufacturers reached a record level as companies struggled to sell their products in current market conditions” said Joe Hayes, senior economist at S&P Global Market Intelligence.
However, France is doing much better than Germany, where the contraction in activity intensified in October due to rising energy costs, which weigh heavily on the industrial sector. The PMI composite index fell to 44.1 from 45.7 the previous month.
Source: BFM TV
