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That’s a slight improvement to the initial estimate but amid softer demand conditions, French manufacturing output was seen declining sharply once again. Of note, employment activity is also seen shrinking so that will be something to be wary about in the months ahead. HCOB notes that:

“The French manufacturing sector is still stuck in the mud as output dropped for the sixteenth month in a row. Weak demand
was also signalled by a steep and accelerated decline in new orders. Output declined in all three segments – consumer,
intermediate and capital goods – with the HCOB PMIs falling primarily in the last two segments.

“Seeing a decline in new orders, manufacturers are switching gears to work through their backlogs of work. In addition, the
quantity and stocks of purchases further deteriorated in a sign that businesses are retrenching and preparing for a sustained
contraction in the industry.

“Prices in the manufacturing sector are still rolling downhill. Although the pace at which prices fell slowed down compared to
August, lower demand for input goods is seemingly pushing suppliers to be more competitive with the pricing of their goods.
Output prices also declined further, reflecting a pass-through by manufacturers.

“Subsequently, it’s all gloom and doom for manufacturers when it comes to future production. The main reason for the
pessimistic view is the risk of further falls in new orders. This can also be seen in the employment change. Companies laid
off workers in response to falling activity, preparing for a further downturn. Fears of spill-over effects from downturns in other
parts of the economy, such as the construction sector, are also compounding manufacturers’ misery.”


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