- Ahead of 46.9
- Manufacturing PMI 41.9 vs 43.0 expected
- Prior to 43.1
- Composite PMI 46.7 vs 45.9 expected
- Ahead of 45.9
It differs in that the services sector performed better than expected but the manufacturing sector was worse. That said, both remain in contraction territory and reaffirm a drop in overall business activity. In particular, the pace of decline in the manufacturing sector is at its worst in 55 months. But overall, this just continues to point to softer demand conditions and there was a significant reduction in employment conditions as well. HCOB notes:
“The French crisis does not seem to be abating. The Composite HCOB Flash PMI has seen a slight improvement in December compared to the previous month, but is still in contraction territory, with no hope of recovery. The business sector remains the Achilles heel of the French economy, and even the better performing services sector is not providing any growth impetus. Political instability, leaving France without a government and an agreed budget for 2025, is likely to continue into the coming year. It is unlikely that President Emmanuel Macron will appoint the experienced politician François Bayrou quickly and poorly organized as Prime Minister more stable conditions. Bayrou lacks support from the left and the right, suggesting that he could face the same fate as Barnier. It looks like volatility is here to stay and won't be going away anytime soon.
“The manufacturing sector had a terrible year in 2024. According to PMIs, the French industry has not grown in any month. The Flash HCOB Manufacturing PMI is still well below the growth rate of 50 in December and is slightly weaker compared to the previous month. There is a significant lack of orders from domestic and international markets, which leads to a significant decline in employment. Political instability in the country, weak economic conditions in sectors such as construction and the automotive industry, and reduced interest from buyers in other European countries are reducing sales, as anecdotal evidence suggests.
“The service sector is still in limbo. Apart from a brief period around the Summer Olympics in Paris, service providers have struggled to generate growth momentum. The HCOB Flash Services PMI continues to paint a weak picture of the sector in December, despite a slight increase from the previous month. Although the index for new orders has seen a jump, it is still declining overall. Particularly alarming, although not surprising, are the first layoffs by French service providers in almost four years. Service companies surveyed indicated that political uncertainty is a barrier to business.”
