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French private sector growth stagnate, but remains marked in August

France private sector
France   IHS Markit Flash France PMI

The latest set of flash France PMI data signalled a further rise in French private sector output during August.

The rate of expansion remained sharp overall with the IHS Markit Flash France Composite Output Index, which is based on around 85% of usual monthly survey replies, posting well above the neutral 50.0 level at 55.6.

This was unchanged from the six-month low recorded in July.

A softer increase in service sector activity was recorded for the third successive month in August, although, the rate of growth remained marked and above the long-run series average.

In contrast, the rate of expansion in manufacturing production was the sharpest in almost six-and-a-half years.

French private sector companies continued to record a marked rise in new business midway through the third quarter.

The rate of growth, however, eased to a three-month low.

The slowdown was driven by a weaker rise at service providers as manufacturers recorded the sharpest increase in new orders since December 2010.

Bolstered by greater output and new orders, firms further added to their payrolls during August, thereby extending the current sequence of employment growth ten months.

Job creation was evident at both service providers and manufacturers.

Rates of expansion eased from the previous month but remained marked in both cases.

In spite of a further rise in staffing numbers, the amount of business outstanding at French private sector companies increased for the eighteenth consecutive month in August.

Furthermore, the rate of increase accelerated from July and remained above the long-run series average.

Backlogs of unfinished work continued to accumulate to a greater extent at manufacturers than at service providers, but rates of growth remained marked in each sector nonetheless.

The latest data signalled another rise in average input costs faced by French private sector firms, thereby extending the current period of inflation to a year-and-a-half.

That said, the rate of increase was the least marked in 12 months.

In contrast, average selling prices at private sector companies in France declined in August, having fractionally increased in July.

The downturn was driven by the sharpest decrease at service providers since November last year.

On the contrary, manufacturers continued to raise their charges, albeit to a weaker extent than in the previous month.

Overall business confidence in France remained strong in August, but softened to a seven-month low.

Optimism in at both manufacturers and service providers waned from the previous month.


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