- Prior 45.4
- Manufacturing PMI 46.8 vs 43.5 expected
- Prior 43.1
- Composite PMI 47.7 vs 45.0 expected
- Prior 44.6
Those are strong beats across the board and the euro is up to fresh highs on the day now. This diminishes the odds of an April rate cut, now seen at ~43%. Going back to the readings, the services print is a 8-month high while the manufacturing print is a 11-month high. Both are seen rebounding amid tentative signs of improvement in demand conditions while new orders also fell at its softest rate since last May. HCOB notes that:
“France’s economy is in recovery mode. Even if the economy continues to shrink, this is happening at a much slower pace,
as the composite PMI has improved by more than three points. This is mainly due to demand, which is no longer declining at
a rapid pace. The pace of output price growth has also slowed considerably. Our HCOB Nowcast, which incorporates the
latest PMI figures, has improved as a result.
“The French service sector is edging closer to growth. Exporters are partly responsible for this glimmer of hope, and one
possible explanation for this would be an improvement in demand for tourism. It is crucial for the French economy that the
service sector returns to growth as quickly as possible in order for the second-largest euro area economy to recover. After
all, the sector accounts for almost 80 % of total output.
“France’s manufacturing industry is gradually making a comeback. The new orders index has risen by more than seven
points, which has significantly curbed the slump in production. Whether this is just a one-off or the start of a trend is still to be
seen, especially as manufacturers’ expectations for future business activity remain pessimistic and well below their long-term average.
“These HCOB PMIs for prices will certainly please the ECB. Services inflation is currently acting as the main driver of
consumer price inflation in France and our survey shows a further significant slowdown in February. Output price inflation in
the services sector has reached its lowest in almost three years. It is possible that the index will soon fall below the
expansion threshold of 50, as has been the case in the manufacturing sector since the middle of last year.”