Demand weak spot continues to be a dampener to France’s manufacturing sector, with employment circumstances additionally beginning to worsen at a way more speedy tempo. HCOB notes that:

“France’s manufacturing sector continues to undergo with weak demand. Excessive financing prices are hurting items producers, as
is sustained destocking. There are at the moment no indicators to counsel an enchancment is close to. Accordingly, our HCOB nowcast
mannequin alerts contraction of -0.7% within the manufacturing sector for the fourth quarter, with a drag particularly coming from the
capital items section.

“Sluggish demand is not hitting output as onerous — because of backlogs of labor. New orders proceed to say no considerably, so
firms are counting on their backlogs of labor to help manufacturing. In consequence, fewer uncooked supplies are being bought
and saved.

“The hazard of inflation continues to be current. enter costs stood out in November, with the index rising by round 4 factors – to be
marginally above 50 – amid stories of upper materials prices. Output costs have been nonetheless decreased, with the decline completely
attributable to the intermediate items section. Total, the rise within the enter costs PMI may translate into the next
output costs PMI, growing the danger of higher inflation. Our HCOB nowcast mannequin expects a rise in CPI of 0.2% on a
month-to-month foundation in November.

“Total, demand is predicted to remain weak and financing circumstances are to remain tight, so producers anticipate no
amelioration any time quickly. They see no enchancment within the demand scenario over the following twelve months, which can also be
mirrored within the employment knowledge from the PMI survey. We are able to subsequently anticipate additional rises in unemployment within the coming
months, after official INSEE figures have confirmed the jobless fee rising to 7.4% within the third quarter this yr.”