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Fastest fall in French private sector output for over four years

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Staff Writer | Friday January 25, 2019 4:19AM ET
French service activity
France   The latest decline was driven by service providers

At 47.9 in January, the IHS Markit Flash France Composite Output Index fell from 48.7 in December, and pointed to the quickest contraction in French private sector output for over four years.


At the sector level, the latest decline was driven by service providers, as firms reported a moderate fall in activity.

Moreover, the pace of contraction accelerated compared to December to reach its fastest for nearly five years.

In contrast to the recent trend, manufacturers outperformed their service providing counterparts.

Goods producers recorded broadly-unchanged output in the first month of 2019, stabilising after the contraction in December.

Meanwhile, new orders fell for the second month in a row during January.

The rate of contraction accelerated compared to December, with firms registering a solid reduction overall.

At the sector level, the decline was driven by services companies, who reported their sharpest deterioration in new business for 67 months.

On the other hand, manufacturers recorded only a fractional decline.

Employment growth decelerated further in January, easing to its slowest rate for just over two years.

Services providers reported a deceleration in the pace of hiring, registering only a marginal increase in staff numbers.

Meanwhile, manufacturers recorded their fastest expansion in jobs since September 2018.

January data also pointed to the first fall in backlogs of work for nearly three years.

The decline was driven by services providers who reported their first contraction over the same period.

Meanwhile, manufacturers registered solid growth in outstanding business following no change in November and December.

Input price inflation faced by French private sector firms eased to a nine-month low in January.

That said, the rise in cost burdens remained sharp overall.

At the sector level, the latest inflation was driven primarily by manufacturing.

Meanwhile, average output charges rose solidly in the first month of the year.

Firms increased output prices at the quickest pace since June 2018.

Rates of increase were the same across both the manufacturing and services sectors.

Finally, despite the further downturn in January, firms reported higher optimism towards the business outlook.

In fact, confidence was at its strongest since October 2018.

Both manufacturers and service providers recorded an improvement in sentiment.

 

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