Operating conditions in the French manufacturing sector improved at the start of the fourth quarter.
Article continues below
The headline Markit France Manufacturing Purchasing Managers’ Index (PMI) performance of the manufacturing economy – registered 51.8 in October, up from 49.7 in September, its first reading above the neutral 50.0 threshold in eight months and the highest since March 2014.
The PMI is a composite single-figure indicator of manufacturing performance. It is derived from indicators for new orders, output, employment, suppliers’ delivery times and stocks of purchases.
Any figure greater than 50.0 indicates overall improvement of the sector, while any reading below 50.0 indicates overall deterioration. Contributing to the rise in the PMI were increases in output, new orders, and supplier’ delivery times.
Meanwhile, employment stagnated and stocks of purchases fell. Production at French manufacturers increased in October. Moreover, the rate of expansion was the sharpest since March 2014 amid reports of improved demand conditions.
In spite of this, postproduction inventories declined for the sixth month in a row, albeit at a slower rate. New orders also rose during October, thereby ending a nine-month period of contraction.
That said, the rate of growth was slight overall. Concurrently, new export orders rose at a comparatively sharper pace, the fastest seen since May 2011. A rise in new orders failed to translate into more jobs as the level of employment stagnated during October.
However, a sharp increase in company backlogs signalled further pressure on operating capacity. Firms raised their purchasing activity in October in response to higher orders.
Although modest, the rate of increase was the most marked since June 2011. Nevertheless, pre-production goods continued to decline, albeit at the slowest pace in eight months.
Suppliers’ delivery times lengthened for the fiftieth time in as many months during October.
Furthermore, the rate deterioration in vendor performance was the sharpest since May 2011 amid reports that suppliers were struggling to cope with additional demand pressures. ■