No change to the initial estimate with the headline reading being a 55-month low. Ouch. The worry here besides the very soft demand environment is that employment conditions are also starting to be hit. The pace of job shedding was the sharpest in five months and accelerated markedly since November. HCOB notes that:
"The French industrial crisis deepens. The HCOB PMI for manufacturing has once again sent negative signals in December. Excluding the COVID-19 pandemic, the sector's output is now falling at its fastest pace since 2009. Public debt remains a significant issue, exacerbated by the country's political instability. President Emmanuel Macron has yet to establish a strong government capable of taking the necessary steps to address the deficit through a mix of spending cuts and revenue increases. François Bayrou, recently hastily appointed as Prime Minister, also lacks a clear majority and, like his predecessor Michel Barnier, is reliant on the political fringes to pass the 2025 budget.
"A lack of demand momentum is weighing heavily on sales as order intakes shrank both domestically and internationally in December, despite some softening in declines when compared to the previous month. Surveyed companies cited reduced demand from customers in the automotive and construction sectors, and fewer sales to customers across Europe, as reasons for fewer new orders. Consequently, purchasing volumes by companies sank considerably, which is another bleak signal.
"2025 is unlikely to be easier. Surveyed companies have little hope for the new year. Future output expectations for the next twelve months remain negative. According to the surveyed industrial firms, domestic political uncertainty and low customer investment willingness weighed on confidence. It is therefore unsurprising that French industrial companies made significant layoffs. Reflecting the pessimistic outlook of companies surveyed by S&P Global, the French central bank has also lowered its growth forecast for 2025 from 1.2% to 0.9%, citing "heightened uncertainty" for economic prospects both domestically and internationally. This is slightly more optimistic than HCOB Economics, which forecasts growth of just 0.8%."
This article was written by Justin Low at
www.forexlive.com.
