Operating conditions in the French manufacturing sector continued to improve in May, albeit to a weaker extent than seen in the second half of 2017.
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New orders, new export orders and output continued to rise, but at relatively modest rates.
Subdued growth in client demand, however, didn’t prevent accelerated rises in purchasing activity and employment, suggesting firms expect growth to persist in the months ahead.
Indeed, data on business expectations highlighted a further robust degree of business confidence around the 12- month outlook.
The IHS Markit France Manufacturing Purchasing Managers’ Index (PMI) posted 54.4 in May to signal a twentieth successive improvement in the overall health of the French manufacturing sector.
The index reading was up from 53.8 in April, and highlighted a second successive acceleration in the overall rate of strengthening in business conditions.
The improvement was widespread across the three monitored sub-sectors, led by producers of consumer goods.
Overall growth was supported by a further rise in new orders.
That said, the rate of increase was unchanged from the prior month and the jointweakest since February last year.
Growth in export markets meanwhile hit a 15-month low.
In line with subdued client demand, the rate of output growth hit a 14-month low during May.
In spite of this, post-production inventories rose, after having fallen at the sharpest rate in 19 months during April.
Firms expanded their purchasing activity at a sharper pace, which in turn contributed to a second successive rise in pre-production inventories.
Meanwhile, average lead times lengthened at one of the sharpest rates in the survey history as strong input buying put pressure on company supply chains.
Firms continued to add to their workforce numbers during May.
Moreover, the rate of job creation quickened for the second successive month and was only slightly weaker than the multiyear high recorded in December.
On the price front, firms continued to see a rise in input prices in May amid frequent reports of higher raw material costs.
The increase extends the current period of inflation to two years.
Average selling prices also rose as some firms looked to pass on higher cost burdens to their clients. ■