The buyers' index for the manufacturing industry thus stood at 44.5 in October, after 44.6 in September. An index below 50 signals contraction.
French manufacturing production recorded its sharpest decline since January in October, in a context of “a sharp deterioration in the economy”, according to the PMI index published Monday by the S&P Global agency and the Hamburg Commercial Bank (HCOB).
The buyers' index for the manufacturing industry thus stood at 44.5 in October, after 44.6 in September. An index below 50 signals contraction.
The decline in new orders accelerated, particularly on export markets. The contraction in foreign demand accelerated “very sharply” in October, while production fell sharply.
In addition, manufacturers anticipate a continuation of the contraction over the next twelve months, and their degree of pessimism is at its highest in a year: 36% of manufacturers anticipate a decline in their activity, compared to 21% forecasting an increase.
Decline in foreign orders
Purchase prices, however, fell for the first time since March.
According to the companies surveyed, the decline in foreign orders can be explained by geopolitical tensions as well as the fragility of the global economy.
According to the survey, carried out from October 10 to 24, manufacturers, to reduce their expenses, reduced their workforce, implementing partial unemployment measures and not renewing fixed-term contracts.
The companies surveyed attribute the sharp decrease in the overall volume of new orders to “customer reluctance, weak activity in the construction sector, and more generally to difficult market conditions”.
The declines in production are mainly seen in the intermediate goods and capital goods sub-sectors, but the consumer goods sector recorded a moderate increase in activity.
For Dr Tariq Kamal Chaudhry, economist at the Hamburg Commercial Bank, “the French manufacturing sector remains mired in the crisis in October”. However, he notes “a more favorable trend in price data”. But overall, “the outlook remains worrying for the French manufacturing industry,” he warned.
