France’s Manufacturing Sector Update

PARIS (Reuters) – France’s manufacturing sector continued to contract in September, though at a slower pace than the previous month. According to a business survey on Tuesday, the HCOB France Manufacturing Purchasing Managers’ Index (PMI), compiled by S&P Global, rose to 44.6 in September from 43.9 in August, marking its highest level since June.

Despite this increase, the index remains well below the threshold of 50.0 that separates growth from contraction, indicating ongoing deterioration in the sector.

Dr. Tariq Kamal Chaudhry, an economist at Hamburg Commercial Bank AG, stated, “The French industrial sector remains mired in a deep recession,” suggesting that industrial companies are becoming increasingly pessimistic about the future due to ongoing political uncertainty in the country.

The survey also highlighted that weak demand continues to be the primary factor behind the decline in output. Both domestic and international demand remained subdued, with particularly notable sales drops to North America and parts of Western Europe.

Manufacturers face challenges with rising input costs, which continue to squeeze profit margins. Chaudhry noted, “Rising input costs cannot be entirely passed on to end customers due to stagnant demand.” Nearly 28% of surveyed companies anticipate a decrease in production over the next 12 months, while 24% expect growth.