Manufacturing activity registered its biggest contraction in almost three years in France in April, according to the PMI index published this Tuesday by the firm S&P Global and the Hamburg Commercial Bank (HCOB). The indicator stood at 45.6 points in April, its lowest level since May 2020 and almost two points less than in March (47.3). An index above 50 reflects an expansion of activity, while an index below this threshold corresponds to a contraction.
To explain this third consecutive month of decline in the indicator -a trend that goes against the current good health of the services sector-, S&P and HCOB highlight a “very strong deterioration in demand” directed at industrial companies.
Some encouraging signs
This drop in new orders is explained both by “excess inventory with customers, an unfavorable environment for commerce and in some cases, interruptions linked to strikes” against the pension reform. Orders from abroad also remain sluggish and “companies surveyed reported notably weakening demand in the European and North American markets,” notes Norman Liebke, HCOB economist. Finally, employment also contributed to the decline in the indicator in April, although the number of employees is certainly still increasing but increasing less rapidly than in March.
On a more optimistic note, “inflationary pressures” continue to ease in the manufacturing sector and the prices companies pay their suppliers have only “increased slightly.” Sales prices to customers also increased less rapidly than in March. Another encouraging sign, “12-month business outlook for French manufacturers is up again.”
The survey data was collected from April 12 to 21 from a panel of about 400 manufacturing companies.
Source: BFM TV
