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Private sector growth continues in France

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Christian Fernsby ▼ | December 18, 2019
At 52.0 in December, the IHS Markit Flash France Composite Output Index was little-changed from 52.1 in November, pointing to a further modest expansion of business activity across the French private sector.
European economy   At the sector level, performances diverged
At the sector level, performances diverged from those seen in the previous two survey periods.

Topics: Private sector France

Manufacturing production broadly stagnated so overall activity growth was supported by the service sector, where firms recorded a ninth successive monthly expansion, albeit one that was moderate overall.

Similar to the trend in business activity, private sector companies saw another increase in new orders during December.

The rate of growth was little-changed from November and modest overall.

Underpinning the latest result was a solid rise in new business at service providers, while manufacturers posted a renewed decline.

Stronger international demand helped support new order growth at the end of the fourth quarter, as new export orders abroad increased for the third month in a row.

That said, the latest rise was the softest in the current sequence and only marginal overall.

At the sector level, the result was driven by an expansion at service providers.

Manufacturing firms recorded approximately no change in new business from abroad compared to November.

Amid a further rise in business requirements, private sector firms in France continued to increase their staff numbers in December.

This extended the current sequence of workforce expansion to just over three years.

The rate of job creation was slightly softer than November’s 13-month high, but remained solid overall.

Sector data revealed contrasting trends, with service providers recording the quickest rise in employment since July, while numbers were broadly stable in manufacturing.

Despite the overall increase in employment, volumes of outstanding business continued to grow at a faster pace in December.

In fact, the latest expansion was the quickest since October 2018.

In contrast to November, growth was primarily driven by the service sector.

On the cost front, input prices continued to rise, extending the current run of inflation to nearly four years.

The latest increase was faster than in November, but remained historically subdued.

When explaining inflation, panellists mentioned higher transport costs and elevated pork prices.

Firms opted to pass on some of the additional costs to their clients, with a slight increase in output charges recorded during the latest survey period.

The rate of inflation was little-changed from November amid a fractionally slower increase in the service sector and marginally quicker rise at manufacturers.

Finally, businesses remained optimistic towards the one-year outlook for output in December, supported by expectations for accelerated demand growth.

The degree of positivity remained historically elevated but was weaker than November’s sevenmonth high.