- Prior 45.4
- Manufacturing PMI 42.0 vs 43.3 expected
- Prior 42.9
- Composite PMI 43.7 vs 45.0 expected
- Prior 44.6
That's a notable miss on estimates with both the services and manufacturing sectors contracting further than in November. That's not a good vote of confidence to the ECB's policy stance yesterday. And that sets up the French economy for a technical recession towards the end of the year. HCOB notes that:
“The French economy is sinking into the recession quagmire, with HCOB Flash PMIs painting a disconcerting picture in December of the second-largest EU economy. Both the services and manufacturing sector contractions have intensified compared to the previous month. Survey participants attribute lower activity levels to weak demand conditions, reduced purchasing power of customers, and general sluggishness in the economy – not good news for year-end growth. Our HCOB Nowcast predicts a slight contraction of 0.2% for the French GDP in the fourth quarter.
“In December, the HCOB Flash PMI for the manufacturing sector hit its lowest level since May 2020, registering at 42.0. The French industry, in particular, expressed concerns about future prospects. Domestic and international orders are plummeting, signalling trouble for employment as job losses extended. The only consolation for the industry lies in falling input prices, but without substantial new order intakes, this is likely to provide only limited relief.
“French service providers are currently in a tough spot. The HCOB Flash PMI for services activity is at 44.3 index points, the worst since November 2020. New Business is in a dismal state and the backlog of orders is shrinking fast, too. This bodes ill for the performance of the sector in the near future. The silver lining is that employment remains stable. Overall, it's hardly surprising that our HCOB Nowcast predicts a decline of 0.2% for the service sector.”
