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Renewed slowdown in French private sector output growth

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Staff Writer | May 24, 2018
May data signalled a renewed slowdown in French private sector output growth.
French private sector
France    Private sector firms took on new staff
Indeed, at 54.5 in May, down from 56.9 in April, the IHS Markit Flash France Composite Output Index highlighted the weakest rate of expansion since the start of 2017.

The moderation in overall output growth was driven by the services sector, where the rate of increase in activity was the softest for 16 months.

In contrast, manufacturers registered a sharper rise in output in May.

Moreover, the rate of expansion was marked in line with the average seen in the current 21-month sequence of expansion.

The overall slowdown was indicative of softer underlying client demand, as the rate of growth in new orders moderated to a 17-month low.

In line with the trend for activity, diverging trends were evident by sector, with a softer expansion at service providers contrasting with an acceleration at goodsproducers.

In line with weaker rises in client demand, private sector firms in France took on new staff to a weaker extent midway through the second quarter.

That said, the rate of job creation remained far sharper than the long-run series average.

The rate of increase in employment was stronger at service providers than their manufacturing counterparts.

Despite a notable moderation since April.

In spite of weaker growth in client demand, the amount of unfinished work at French private sector companies continued to increase in April, thereby extending the current period of expansion to 27 months.

Nevertheless, the rate of accumulation eased to a nine-month low amid slower rises at both manufacturers and service providers.

Average input prices faced by companies operating in the French private sector rose for the twenty-seventh time in as many months during May.

Moreover, the rate of inflation was the most marked for three months.

Where an increase was reported, firms generally commented on a combination of higher wage bills and fuel costs.

Manufacturers continued to record sharper inflation than their service sector counterparts.

French private sector firms reported a ninth consecutive rise in average charges in May.

The rate of increase was broadly unchanged from the prior month and substantially less marked than the corresponding rise in input costs.

Manufacturers continued to report a sharper increase in charges than service providers.

Finally, French private sector firms maintained an optimistic outlook midway through the second quarter.

The degree of positive sentiment ticked-up slightly from April and remained marked overall.

Service sector firms remained more confident than manufacturers.