France March flash companies PMI 46.6 vs 46.3 anticipated

• Prior 45.3
• Manufacturing PMI 48.9 vs 46.4 expected
• Prior 45.8
• Composite PMI 47.0 vs 46.5 expected
• Prior 45.1

It’s a modest improvement to the month before but French business activity continues to keep in contraction territory in March. The improvement in the manufacturing sector is a welcome development at least but demand conditions remain weak overall and there were further job losses recorded. Meanwhile, the outlook remains pessimistic as well with business confidence sitting at near five-year lows. All of this belies the improvement in the numbers above. HCOB notes that:

“France’s economy is struggling to gain momentum. Although the HCOB French Flash PMI improved in March compared to
the previous month, it remains in contraction territory. The French political landscape, which has significantly negatively
impacted market sentiment in recent months, is now somewhat less unstable. France passed a delayed budget law for 2025
in February which helped it avoid a downgrading of its credit rating, but there is still a high degree of uncertainty regarding
future economic policy.

“While the French industry is struggling, there are signs of improvement. The Flash Manufacturing PMI made a significant
leap compared to the previous month, though it still signalled a deterioration in operating conditions. Uncertainty both
domestically and internationally, competitive pressures, and subdued demand in key sectors such as automotive,
construction, and agriculture were cited as reasons for the muted outlook, although hopes for improved activity did rise to
their strongest level in nine months.

“Meanwhile, the HCOB flash PMI data for services offers no relief for this sector in March. Although there was a softer
decrease in business activity compared to the previous month, the rate of decline remained solid. Economic uncertainty,
geopolitical tensions, and reduced demand are weighing on service sector output. The only reassuring news is that input
cost pressures have somewhat eased, and service providers’ pricing power has slightly increased.”