- Prior 47.1
France’s manufacturing sector remains sluggish in March as demand conditions continue to keep a drag on overall activity. Production may have fallen at its weakest pace in almost two years but there needs to be more in order for the sector to turn the corner. Of note, new orders fell deeper into contraction territory during the month. And that highlights the main problem for the sector now. HCOB notes that:
“The recovery of the French manufacturing sector is postponed to at least the second quarter. Although output declined at
the slowest rate over the near two-year sequence of contraction, the sector still faces major difficulties with weak client
demand, increased interest rates and elevated prices. Manufacturers’ struggles are also evident by the fact that companies
across the sector cut staff.
“Consumer goods drove the limited improvement of French manufacturing in March. Output in the consumer goods sector
rose sharply, while the other two segments – investment and intermediate goods – declined for another month. Client
demand was the strongest in this segment, also driving up consumer goods selling prices to a ten-month high.
“Supply chain issues appear to be diminishing. Manufacturers are shaking off the supply chain disruptions caused by Houthi
attacks in the Red Sea. The PMI for suppliers’ delivery times rose again and was around 50, signaling stability, after the
Index had fallen to a near one-year low in January.
“French manufacturers are looking into the future with optimism. The Future Output Index is above 50 for the second month
in a row and while it is still below its historic average, manufacturers are building their optimistic view upon an amelioration in
demand, driven by an economic recovery this year. Forecasts about incoming interest rate cuts and a betterment of the
French and Global economy are supporting the companies’ expectations.”