- Prior 46.0
There is a slight revision higher to the initial estimate but it still points to a deeper downturn in French manufacturing to start Q3. Demand conditions are deteriorating and that is leading to a fall in production and purchasing activity. Meanwhile, employment and stocks are also declining again. HCOB notes that:
“The French manufacturing sector was brought further to its knees in July as production was cut again at a fast pace, the lack of new orders perpetuated and producers slashed jobs at the fastest pace since the start of the Covid-19 pandemic.
“Amid the struggles of the global manufacturing sector, France’s industry is suffering the steepest fall in export orders since 2009, when excluding the lockdown-hit months in 2020. China’s disappointing growth may play a central role in this respect, as does Germany’s doldrums, as both countries are vital export destinations for France.
“The lousy order situation means there are tough times ahead for the French industrial sector. We see increased downside risks to our third quarter GDP forecast, which is still slightly positive.
“The European Central Bank will certainly be pleased to see that its tough monetary stance is finally paying off, with input and output prices both decreasing in July. However, the fall in output charges illustrates the increased competition French companies are facing amid a battle for market share in a weak economy, which ultimately will reduce margins.”
