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Modest recovery in manufacturing production during October in France

Christian Fernsby ▼ | November 5, 2019
French manufacturers posted a slightly quicker improvement in business conditions in October.
French nuclear plant
Europe   The reading pointed to a marginal improvement in business conditions
The result was supported by the fastest rise in output since June and a quicker increase in staff numbers.

Topics: Manufacturing France

However, despite a rise in new export orders, there was a further marginal fall in overall new business.

Meanwhile, firms pared back purchasing activity for the second month in a row, which contributed to the sharpest depletion in pre-production inventories since August 2016.

The seasonally adjusted IHS Markit France Manufacturing Purchasing Managers' Index (PMI) rose to 50.7 in October, up from 50.1 in September.

The reading pointed to a marginal improvement in business conditions in the French manufacturing sector.

A key factor behind the result was a moderate rise in production at French manufacturing businesses.

The latest increase was the quickest for four months.

Some panellists mentioned new business plans when explaining the expansion.

Improving foreign demand was evident in the latest survey period, as new export orders rose slightly following a stagnation in September.

However, overall new business fell for the second month in a row.

The rate of decline was littlechanged from September and only marginal overall.

Latest survey data also revealed a further increase in staff numbers at manufacturers in France, extending the current run of workforce expansion to three months.

Moreover, the rate of job creation was the quickest since June.

When reporting a rise in employment, some panellists associated this with efforts to expand output.

Despite the further increase in staff numbers at the start of the fourth quarter, firms were unable to alleviate capacity pressures.

Backlogs of work increased for the fifth month in a row, with the rate of expansion accelerating from September.

Meanwhile, input buying at French manufacturing firms continued to decline.

The pace of reduction quickened slightly from September and matched that seen in July, which was the fastest since August 2016.

This, in part, drove the sharpest contraction in pre-production inventories since August 2016.

On the cost front, input prices fell for the second month in a row.

Moreover, the rate of reduction accelerated to the fastest for three-and-a-half years and was solid overall.

Despite the decrease in cost burdens, firms opted to increase their average output charges.

Finally, firms remained optimistic towards the business outlook in October, supported by expectations for a rise in new business.

However, the degree of positivity fell to the weakest since April 2016.


 

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