Latest data released by Markit - 22 October 2021

  • Prior 56.2
  • Manufacturing PMI 53.5 vs 54.0 expected
  • Prior 55.0
  • Composite PMI 54.7 vs 54.7 expected
  • Prior 55.3

It is a mixed report as overall business activity stumbled a little, largely due to the manufacturing sector as supply bottlenecks hit goods producers. The services reading is a 3-month high, so that is some comfort but the composite reading slips to a 6-month low.

Looking at the details, manufacturing output is seen falling to its slowest in 17 months with supplier performance slumping heavily amid a low availability of shipping containers as well widespread shortages of materials and logistics.

Meanwhile, inflation pressures grew once again with output charges rising for an eight straight month although at a slightly lower rate than in September. Markit notes that:

"Responsibility for France's economic recovery was placed firmly on the shoulders of the service sector in October, as latest PMI data showed manufacturing output falling for the first time since January. The overall rate of expansion slowed to a six-month low as the supply-side issues hurting manufacturers the most offset a faster expansion in services activity. Of the medley of letters that an economic recovery can look like, France's growth profile is currently akin to a "K".

"While until recently, the effects of inputs shortages have been most apparent on prices, we're now seeing them have a noticeable impact on production levels and order books as firms simply lack the stocks to produce their goods, and customers are having to cancel or postpone their orders. A number of firms suggested that some parts of the economy, like the automotive sector, are really struggling.

"That said, there are still some positives which are keeping the economy ticking. Order books at service providers expanded at a sharper and healthy pace. Looser travel restrictions has helped lift tourism, and firms are recruiting extra staff to facilitate higher levels of activity. Nevertheless, the service sector's sensitivity to virus-related policy means risks from the pandemic cannot be ignored and we remain set for a challenging winter ahead."