France: Largest decline in manufacturing production since May 2020, according to the PMI index

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French manufacturing production suffered its biggest decline since May 2020 in December, due to a further drop in the overall volume of orders, according to the PMI index published Thursday by the S&P Global and Hamburg agencies Commercial Bank (HCOB). 

The buyers' index for manufacturing stood at 41.9 in December, down from 43.1 in November. A reading below 50 signals a contraction. 

“Production posted its sharpest decline since May 2020, driven by another sharp decline in the overall volume of new orders,” particularly in the automotive and construction sectors, the statement said. “Weak demand was reflected in inventory levels, which fell in December.”

Employment “fell again, with payrolls falling at a much faster pace than in November, while manufacturers cut prices to boost sales,” it added.

The decline in production “mainly reflects an unfavourable environment for demand”, indicate S&P Global and HCOB. 

And the decline in the overall volume of new orders also reflects “the sluggishness of demand on international markets”, since export sales decreased in December, thus following “the trend recorded for almost three years”. 

French manufacturing companies “said they were pessimistic” about an increase in their activity in the next twelve months: “the fear of a prolonged decline in demand, the current climate of political uncertainty and the weakness of investment spending by customers have, according to respondents, weighed on the level of confidence”, underlines the press release. 

 

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