The performance of the French manufacturing sector remained strong in December. Production and new orders continued to rise at marked rates, despite some reports of disruption related to adverse weather conditions during the month. The headline Purchasing Managers’ Index (PMI) – a seasonally adjusted index designed to measure the performance of the manufacturing economy – posted 57.2, only marginally below November’s 10-year high of 57.9 and higher than the initial flash figure of 56.3.
Growth of production at French manufacturers was strong in December and only fractionally below the eight-month high recorded in November. Panelists reported that output had been raised in line with a further increase in new orders. The rate of expansion of new work remained considerable, despite easing to a three-month low. Export sales growth was particularly strong, accelerating to the sharpest since August 2000. Anecdotal evidence suggested that Asia and Eastern Europe were key sources of new contract wins.
Reflective of the ongoing strong trend in incoming new work, French manufacturers saw a marked increase in levels of outstanding business during December. Backlogs rose at the fastest pace for eight months. Correspondingly, stocks of finished goods continued to decline as part of the growth in sales was met through the depletion of existing inventories.
Employment in the French manufacturing sector rose for a second consecutive month in December. However, the rate of hiring eased since November to only a modest pace. Those panelists that indicated a rise in headcounts generally cited increased workloads.
Purchasing activity by French manufacturers continued to rise in December, extending the current sequence of growth to 17 months. Furthermore, the rate of increase was the strongest since April. Stocks of purchases were broadly static, ending a seven-month period of contraction.
Supplier delivery times in the French manufacturing sector lengthened markedly again in December. Lead times increased at the sharpest rate since June, with panelists commenting on difficulties sourcing a range of inputs. Electronic components in particular were reported to have been in short supply.
Input price inflation accelerated to the steepest for seven months in December, and remained well above the long-run average for the survey. Survey respondents commented on increased prices paid for a range of commodities. However, output price inflation eased from November’s twenty-seven month high.
Jack Kennedy, economist at Markit and author of the France Manufacturing PMI, said: “The French manufacturing sector provided some festive cheer in December, as output continued to rise strongly despite disruption caused by the poor weather. Firms benefited from rising international demand for French goods, as export orders growth hit a 10-year high. Supply chain pressures could be a near-term constraint for manufacturers though, with vendors’ stocks under pressure and input price inflation intensifying.”
