Growth momentum accelerates across French private sector
Staff Writer |
At 55.1 in August, up from 54.4 in the previous month, the IHS Markit Flash France Composite Output Index remained above the crucial 50.0 nochange mark for a twenty-sixth month in a row.
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Moreover, the rate of growth accelerated to a fourmonth high thanks to stronger expansions in both the services and manufacturing sectors, with the former registering a sharper rate of growth for the seventh month running.
Continuing the sequence observed since July 2016, service providers recorded another expansion in business activity during August.
The pace of the latest improvement was in-line with the average recorded over the aforementioned period.
Many respondents linked the upturn in activity to stronger inflows of new orders.
Meanwhile, manufacturers also reported a faster increase in output in August.
The rate of improvement was solid overall and the strongest seen since May.
According to anecdotal evidence, demand was particularly robust from within France.
Alongside rising domestic demand, French manufacturers also noted a return to growth of export orders.
That said, the rate of improvement was only marginal overall and below the historical average.
Reflecting on a improved expansion in new client business, capacity pressures across the French private sector sharpened during August.
Backlogs of work built-up at the steepest rate in the services sector, with many respondents noting continued strong new order growth.
The manufacturing sector also saw an uptick in work outstanding.
The marked increase in workloads encouraged French private sector companies to hire additional staff at a greater pace in August.
Furthermore, the rate of job creation was stronger than in July.
At the sector level, both service providers and manufacturing firms noted additional hiring activity, with the former observing the stronger increase in payroll numbers.
Average input costs faced by French private sector companies rose in the latest survey period.
Furthermore, the degree of cost pressures faced by businesses sharpened since July.
Manufacturers continued to report higher cost burdens than service providers in August, with many noting higher oil-related material costs and rising raw material prices from South East Asia.
Moreover, the rate of input price inflation faced by manufacturers accelerated to a six-month high.
French private sector companies continued to pass on part of the burden of rising input costs by increasing their selling prices in August.
Output price inflation eased in the service sector, whilst it sharpened in manufacturing.
Finally, the degree of optimism among French businesses slipped to the lowest seen since November 2016.
Manufacturing sector confidence deteriorated to a greater extent than services, with some forecasting elevated inflationary pressures. ■