• Prior 48.4
  • Manufacturing PMI 45.8 vs 47.5 expected
  • Prior 47.1
  • Composite PMI 47.7 vs 48.6 expected
  • Prior 48.1

The euro dips to the lows for the day after the softer readings here. Once again, manufacturing conditions remain a big drag but services activity was also weak in France. That just reaffirms the economy remains in contraction territory to wrap up Q1. The good news at least is that price pressures were seen easing as demand conditions stayed weak. HCOB notes that:

“The French economy is delaying its recovery into at least the second quarter. The HCOB Composite Flash PMI fell slightly compared to February, staying in contraction territory. This is especially due to lower demand as the PMI for new business fell at a steeper rate. In addition, backlogs of work fell at a faster rate compared to the previous month, indicating that companies compensated for lower demand by working through orders on hand. However, companies painted a more optimistic picture of the future due to an expected economic recovery this year.

“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, signalling stability, after the index had fallen to a near one-year low in January.

“Companies are looking confidently into the future. Output expectations increased to a 14-month high and were slightly above the index's long-term average, signalling companies’ robust optimism. Firms substantiated their positive belief to expectations of better economic conditions. Some cautiousness was demonstrated by a reluctance to make any further hirings, however.

“Increasing wages are a problem for French consumer price inflation. The latest HCOB Flash PMI figures show that the labour-intensive services sector is still dealing with increasing input and output prices due to increasing wages. Although the Indeed Wage Tracker is flagging a slowdown of overall wage increases in the coming months, pay growth is set to stagnate in the middle of 2024, which may be hinder inflation’s downward trajectory.”