France's manufacturing sector faced in November its steepest decline in new orders since the first wave of the COVID-19 pandemic in 2020, as demand weakened both domestically and internationally, a survey by S&P Global showed on Monday.
The HCOB France Manufacturing Purchasing Managers' Index (PMI) fell to 43.1 in November from 44.5 in October, marking the twenty-second consecutive month below the 50.0 threshold that indicates contraction. A sub-index on new orders came in at 35.9, signalling the worst is yet to come for factory output.
"France's industrial sector remains in crisis mode," said Tariq Kamal Chaudhry, Economist at Hamburg Commercial Bank. "Output continues to shrink, and French procurement managers are holding back on inventory purchases."
Competitive pressures forced firms to discount their prices despite a rise in input costs, leading to margin erosion. The PMI data showed the most significant reduction in sales to foreign customers in four-and-a-half years, with the US and Germany noted as key drags on exports.
Employment in the sector continued to fall, driven by reductions in the capital and intermediate goods segments.
Looking ahead, French manufacturers remain pessimistic, with expectations for output over the next 12 months dampened by uncertainty and weak conditions in the construction and automotive industries.
PMI readings below 50.0 indicate a contraction in activity, while those above 50.0 suggest growth.
