France September final manufacturing PMI 44.6 vs 44.0 prelim

• Prior 43.9

There is a slight revision higher to the initial estimate but it still points to a downturn in France’s industrial sector at the end of Q3. Both output and new orders continue to show deep declines but at least the pace of that is easing. HCOB notes that:

“The French industrial sector remains mired in a deep recession. Despite a slight improvement in the HCOB PMI for
manufacturing in September, the index only edged up to 44.6, keeping it firmly in contraction territory. Output continues to
shrink significantly. Notably, the consumer goods sector came close to stabilizing at the sub-sector level, while intermediate
and capital goods remain in steep decline. Survey respondents cited persistently weak demand as the main cause of
sluggish production.

“The French industrial sector remains under pressure as weak demand collides with rising prices. Industrial companies did
not reap the benefits of discounting strategies in late-2023 and early this year, and higher costs forced them to raise charges
again since the summer. One positive note is that input price inflation in manufacturing is now below the historical average,
thanks to a significant drop compared to the previous month. Some firms reported lower costs from suppliers and for metals.
However, the key challenge persists: rising input costs cannot be entirely passed on to end customers due to stagnant
demand, meaning a squeeze to profit margins.

“French industrial companies are increasingly pessimistic about the future, perhaps unsettled by the ongoing political
uncertainty in the country. Despite a slight recovery compared to the previous month, both domestic and international orders
remain in decline, leading to further cuts in employment. Surveyed firms cited political instability at home and weakening
demand from North America and parts of the Eurozone as the main reasons for the weak order intake. Particularly worrying
is that businesses see no improvement on the horizon, with the index for future activity remaining firmly in negative territory.”

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