- Prior 42.9
Little change to the initial estimate but this still marks a substantial contraction in France’s manufacturing output and new orders to end the year. Of note, employment conditions deteriorated as well last month. HCOB notes that:
“The French manufacturing sector is stuck in a downward spiral. Tighter financing conditions and higher prices have
weakened demand, which is evident in the deteriorating order situation. This has obvious negative effects on both output
and employment numbers. Accordingly, our HCOB nowcast model signals contraction for the French manufacturing sector
in the fourth quarter. It would mean that the sector is in a technical recession as output fell in the third quarter as well.
“The HCOB PMIs show manufacturing is in a broad-based recession. All three sectors – consumer, intermediate and capital
goods – were in a sharp decline in December, although the consumer goods sector is not falling as starkly as the other two
sectors. The discrepancy can be best explained by the order situation, which is not as bad in the consumer goods sector as
in the others.
“Prices were on a downward path in December. The PMI data suggest that manufactured goods prices kept on dragging
overall CPI inflation down in December, just like in recent months. On the one hand this is because of lower raw material
costs such as metals, and on the other hand due to competitive pressures, leading manufacturers to lower their selling
prices.
“French manufacturers continue to paint a bleak picture for their 2024 prospects. A possible downturn in economic activity,
leading to a further weakening in demand was one of the main reasons for the sustained pessimism. The negative sentiment
is also seen in the employment PMI figures. Manufacturers continued to cut their workforce capacity at a fast rate, increasing
the likelihood of a further increase in the official unemployment rate from INSEE.”