Technical Analysis

France December final manufacturing PMI 49.2 vs 48.9 prelim

This just reaffirms another contraction in France’s manufacturing sector, though the drop in output is the slowest in the past seven months. However, employment conditions declined for the first time since January 2021 and there was a slight acceleration in output charge inflation. S&P Global notes that:

“France’s manufacturing downturn continued into December as the effects of inflation, slowing economic activity and high energy costs weighed on the performance of the sector.

“However, the strength of the downturn continued to ease, with output and new orders falling at their slowest rates since May and June respectively. An improvement in business confidence also provides tentative signs that the industrial sector recession may not be as severe as first feared.

Inflation remains a key risk to the performance of the manufacturing sector, with high prices deterring clients from making new orders. The fact that energy costs thus far haven’t surged to the levels some were initially expecting has been a boost to the sector, although whether things take a turn for the worst this remains to be seen.”

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