• Prior 51.7
  • Manufacturing PMI 49.1 vs 47.0 expected
  • Prior 47.2
  • Composite PMI 48.8 vs 49.5 expected
  • Prior 50.2

The French economy is seen contracting for the first time since February last year, with the services and composite readings hitting fresh 20 and 21-month lows respectively. There is a bit of a positive with manufacturing conditions seen picking up but that is hardly comforting to a mainly services-driven economy. Business confidence also fell to its lowest levels in two years. S&P Global notes that:

“Although France’s manufacturing sector has been in a downturn since the start of the second half of 2022, overall economic activity levels throughout this period had been propped up by continued growth in services. This vital support for the economy looks to have ended as service sector output fell for the first time in just over a year-and-a-half in November. As a consequence, ‘flash’ PMI data pointed to the first reduction in French economic activity since February 2021.

“The demand environment has made it intensely challenging for companies to continue growing. Strong headwinds to order books came through a combination of high inflation, intense cost pressures, uncertainty and rising interest rates. Although our PMI surveys suggest that France’s service sector had navigated through these challenges reasonably well up until October, this resilience has now been broken. Business confidence slumped to a two-year low, while a renewed drop in backlogs of work and slowing employment growth highlight growing fragility of the French economy.

“Some positives may be taken from the PMI price indices in November, which showed rates of inflation easing. Nevertheless, they were still elevated, and anecdotal evidence suggests that companies are still opting to pass on higher costs to their clients, despite the damaging effect this is having on order books.”