Record contraction in private sector activity in FranceChristian Fernsby ▼ | March 25, 2020
French private sector activity contracted at the sharpest rate in nearly 22 years of data collection during March, amid widespread business closures due to the coronavirus outbreak.
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Topics: Private sector France
While softer than their services counterparts, manufacturers also registered a sharp decrease in activity and the strongest since March 2009.
Amid wide-ranging measures to stifle the spread of the disease, the Covid-19 outbreak depressed demand in March.
Overall new orders placed with French businesses fell at the fastest pace in the series history.
Registering a series record contraction, service providers again experienced a faster decline than manufacturers, despite the latter recording a considerable fall in new work.
Tumbling demand was partially driven by weaker international sales in March.
The latest contraction in new export business was the quickest since composite data collection began in September 2014.
Both monitored sub-sectors registered their sharpest declines seen during this period.
Amid falling new orders, private sector firms cut their staff numbers for the first time in nearly threeand-a-half years during March.
Moreover, the rate of reduction was the quickest since April 2013.
The result was driven by decreases at both manufacturers and services providers, with the former recording the sharper pace of decline.
Following almost a year of successive accumulation, March data pointed to a sharp fall in outstanding business at French businesses.
Fewer orders allowed firms to alleviate backlogs to the quickest degree since March 2009.
At the subsector level, service providers recorded the faster reduction, although manufacturers also registered a marked decline.
Despite weaker demand conditions, supply shortages drove input prices higher in March.
That said, the rate of inflation eased to the softest in the current 49-month sequence and was only marginal overall.
The rise in overall costs was underpinned by a slight rise in the service sector as manufacturers recorded a solid reduction.
French private sector companies opted to absorb higher costs and reduce average output prices in March.
The decrease ended a two-and-a-half-year sequence of inflation.
However, there were contrasting results at the sub-sector level, with manufacturers raising output prices for the first time in three months, while service providers cut output prices solidly.
Finally, amid widespread expectations of a global economic recession, firms were pessimistic towards the 12-month business outlook in March.
Moreover, the degree of negativity was the most marked since composite data collection began in July 2012.
Both manufacturers and service providers recorded series low levels of confidence. ■