Recent PMI data for France underscores a deepening economic downturn. Manufacturing PMI dropped to a 42-month low, down from 42.8 to 42.6 in November, while Services PMI exhibited a negligible rise from 45.2 to 45.3. Composite PMI edged down from 44.6 to 44.5, signaling sustained contraction in the economy.
Norman Liebke, Economist at Hamburg Commercial Bank, provided a stark analysis of the situation: “The French economy is kind of in a dead-end.” He observed that for six months straight, output has consistently declined, heavily influenced by reduced demand from both domestic and international markets. Liebke attributed these declines to prevailing geopolitical and economic uncertainties. The economist’s nowcasting indicates a slight contraction in France’s GDP
Furthermore, Liebke forecasts an increase in unemployment in the forthcoming months, marking the first significant employment drop since late 2020. This trend aligns the recent months’ downward trend in employment numbers. Prices continue to rise sharply, as Liebke points out, suggesting that official inflation rates might stay elevated for longer than initially expected.
