- Prior 49.3
- Manufacturing PMI 48.9 vs 48.2 expected
- Prior 48.3
- Composite PMI 48.0 vs 48.9 expected
- Prior 48.7
That's a miss on estimates as the contraction in French economic activity deepens in December. I would expect any reaction to the softer figures here to be a case of bad news is bad news but for now, the euro reaction is more muted. Equities are still under pressure though, with S&P 500 futures now down 20 points, or 0.5%, on the day so that could factor more into dollar bids later on.
Looking at the details of the report, the services and composite readings are both at 22-month lows as output continues to decline sharply. S&P Global notes that:
“Another month of falling business activity across the euro area’s second-largest economy heightens the risk that the region is headed for a recession. Output across France fell at the quickest pace since February 2021.
“The worsening of the downturn across services compares with that of the manufacturing sector, which is far more progressed as the PMI survey suggests the industrial economy has been in a recession throughout the second half of 2022. However, we saw manufacturing production fall at the softest pace in seven months in December, while business confidence at goods producers even ticked back up into positive territory. This should be viewed positively and provides tentative signs that the worst may be behind us.
“Nevertheless, downside risks remain abundant, with the outlook for energy prices still a big uncertainty for households and firms. We’re also seeing the impact that higher interest rates are having on the economy, with some firms attributing this as a factor behind lower business activity.
“Based off the latest survey results, we’re likely to see French GDP contract in the fourth quarter, which will raise the risk of a technical recession being confirmed in 2023.”