France’s Manufacturing Sector Sees Higher Than Expected Contraction in July

07 Aug, 2024

France’s Manufacturing Sector Sees Higher Than Expected Contraction in July

France’s manufacturing sector contracted more than initially estimated in July, experiencing its fastest rate of decline in six months due to weaker new orders, according to a survey released on Thursday. The HCOB France final purchasing managers index (PMI) for the manufacturing sector, compiled by S&P Global, dropped to 44.0 points in July from 45.4 in June, below the initial flash reading of 44.1 points. Any figure below 50 points denotes a contraction in activity, while above 50 points indicates expansion.

Norman Liebke, an economist at Hamburg Commercial Bank AG, noted that the French manufacturing sector is not expected to recover soon, with significant drops in demand both domestically and abroad. The outlook for the sector is pessimistic, as manufacturers report fewer orders from the construction sector and a decline in client numbers. This pessimism has led to a deteriorating employment situation, with manufacturers preparing for more challenging times ahead.

In contrast, France’s overall economy grew marginally faster than expected in the second quarter, driven by the delivery of a cruise ship which boosted exports. This growth offset the impact of flat consumer spending, according to official data released on Tuesday.