PARIS (Reuters) -France’s manufacturing sector experienced a rapid decline in new orders in July, marking the sharpest drop since January, as demand for goods, particularly from abroad, fell sharply, according to a survey published on Friday.
The final HCOB France Manufacturing PMI survey compiled by S&P Global registered 48.2 in July, slightly up from 48.1 in June but still below the 50.0 threshold that indicates growth in activity. This points to a moderate decline in operating conditions faced by French factories.
The manufacturing PMI has now been below the 50.0 level since January 2023. The final figure is slightly lower than the flash reading of 48.8.
The downturn in new orders, a key component of the PMI, was accelerating, with client hesitancy and domestic economic headwinds cited as contributing factors. New export sales also sank rapidly, hitting their lowest mark in the year-to-date.
“The economic outlook for France’s manufacturing sector has noticeably deteriorated at the beginning of the second half of the year,” said Jonas Feldhusen, economist at Hamburg Commercial Bank AG.
“Although the headline manufacturing index edged up slightly, the sharp deterioration in order intakes and business expectations are causes for concern,” Feldhusen said.
Despite the challenging environment, factory employment numbers ticked higher for the third consecutive month, although recruitment was mainly focused on temporary staff.
French manufacturers also faced lengthening delivery times, the most pronounced in two-and-a-half years, due to labour shortages and strikes at suppliers.
Prices charged for French goods rose for the first time in five months, as companies passed on higher cost burdens to customers.
The survey highlighted growing uncertainty in the sector attributed to global trade tensions and domestic austerity measures, which may lead to further headwinds in the coming months.
(Reporting by Benoit Van Overstraeten; Editing by Toby Chopra)
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