• Prior 46.9
  • Manufacturing PMI 41.9 vs 43.0 expected
  • Prior 43.1
  • Composite PMI 46.7 vs 45.9 expected
  • Prior 45.9

It is a contrast as the services sector performed better than expected but the manufacturing sector was worse. That said, both remain in contraction territory and reaffirms a drop in overall business activity. Of note, the pace of decline in the manufacturing sector is the worst in 55 months. But all in all, this just continues to highlight softer demand conditions and there was also a sharp reduction in employment conditions. HCOB notes that:

“France's crisis shows no signs of abating. The Composite HCOB Flash PMI has seen a slight improvement in December compared to the previous month, but it remains in contraction territory, offering no hope for recovery. The industrial sector remains the Achilles heel of the French economy, and even the relatively better-performing services sector fails to provide any growth impetus. Political instability, leaving France without a government and an approved budget for 2025, is likely to persist into the coming year. The hasty and poorly organized appointment of the seasoned politician François Bayrou as Prime Minister by President Emmanuel Macron is unlikely to bring about more stable conditions. Bayrou lacks support from both the left and the right, suggesting he may face the same fate as Barnier. Instability appears to be here to stay and will not disappear anytime soon.

“The manufacturing sector experienced a dismal year in 2024. According to PMIs, the French industry has not grown in any month. The Flash HCOB Manufacturing PMI remains well below the growth threshold of 50 in December and is slightly weaker compared to the previous month. There is a significant lack of orders from both domestic and international markets, leading to a notable decline in employment. Political instability in the country, weak economic conditions in sectors such as construction and the automotive industry, and reduced interest from customers in other European countries are dampening sales, as anecdotal evidence suggests.

“The service sector remains in limbo. Apart from a brief period around the Summer Olympics in Paris, service providers have struggled to generate growth momentum. The Flash HCOB Services PMI continues to paint a weak picture of the sector in December, despite a slight increase from the previous month. While the index for new orders has seen a jump, it remains in decline overall. Particularly alarming, though not surprising, are the first layoffs by French service providers in almost four years. Surveyed service companies indicated that political uncertainty is a hindrance to business.”