French manufacturing contracts sharply in August ’24

France’s manufacturing sector faced a significant downturn in August, according to the latest HCOB PMI data released on Monday. The manufacturing PMI fell to 43.9 from 44.0 in July, marking the sharpest deterioration in factory conditions in seven months.

“The state of the French manufacturing sector is deteriorating. What seemed like a recovery of the industrial sector at the start of 2024 turned out to be just a brief uptick. The slowdown of the manufacturing sector continued in August. Output declined for the twenty-seventh month running, as too did new orders overall.” said Norman Liebke, Economist at Hamburg Commercial Bank.

New orders dropped at a pace only matched during the COVID-19 pandemic and global financial crisis. Export demand also fell sharply, the most in three months.

Production continued to decline for the twenty-seventh consecutive month, with the pace of decrease accelerating to the fastest since January.

Employment shrank for the fifteenth month, and purchasing activity saw its largest drop of the year. Supplier delivery times worsened, the most significant decline since February.

Input cost inflation surged, reaching its highest level in 18 months, although selling price increases were moderated to maintain competitiveness.

The outlook for production turned pessimistic for the first time since January, with political uncertainty cited as a concern.