France January final manufacturing PMI 45.0 vs 45.3 prelim

• Prior 41.9

The contraction in the manufacturing sector eased to start the new year but there’s still decline in both production and new orders. Things are still looking pessimistic, so it’s hard to say that the improvement here will lead to much in the months ahead. HCOB notes that:

“France’s manufacturing industry remains in a deep recession. The HCOB PMI for manufacturing rose significantly to 45.0 in
January, but it remains below the growth threshold of 50. Output has now been shrinking for 32 consecutive months.
Anecdotal reports suggest that the political climate in France is particularly concerning for the industry. Although the new
government under François Bayrou survived a no-confidence vote in mid-January, the passage of a budget for 2025 in midFebruary is far from certain. Long-term planning security and an end to political infighting in Paris could help the country and
the manufacturing sector emerge from the crisis.

“Competitive pressures were reflected in prices. Input prices are still growing, but at a relatively weak pace in a historical
context. According to surveyed industrial companies, costs for transport and materials such as wood and cardboard were
up. However, weak demand in the sector forced industrial companies to lower their output prices as competition intensified.

“The outlook remains pessimistic. Order intakes, both domestically and internationally, remain in contraction. Geopolitical
tensions are weighing on international orders, although some companies reported lower sales in Africa. Expectations for
output for the next twelve months remain negative, although sentiment saw a significant improvement compared to
December. Due to this uncertainty, French industrial companies remain cautious about employment, primarily laying off
temporary workers.”

This article was written by Justin Low at www.forexlive.com.