- Previous 55.0
- Manufacturing PMI 44.0 vs. 44.3 expected
- Previous 43.9
- Composite PMI 47.4 vs. 50.6 expected
- Previous 53.1
Ah. The August jump was largely expected to be a one-off amid increased demand from the Paris Olympics. But it faded very quickly with little spillover into September. The headline reading is at a six-month low, adding to the additional downside pressure on the French primary sector as well by the end of Q3. The only silver lining for the ECB is that cost pressures are expected to ease at least through the month.
The EUR/USD pair is currently down at 1.1120, down 0.4% on the day from around 1.1145 earlier. The 200-hour moving average at 1.1104 will be next to limit any further pressure in the coming session. However, this will not be enough to convince the ECB to move as early as October. The Hong Kong Bank notes that:
“It is a sad reality; the strong growth in the French economy that we saw in August has evaporated by September. The HCOB Flash Composite PMI has fallen below the critical 50 level, now at 47.4. This confirms suspicions that the services sector’s rise in August was the result of an Olympics-related anomaly, which have now dissipated. The manufacturing sector remains difficult, just as it was the previous month. Our current HCOB report forecasts a near-complete recession in the French economy in the third quarter, compared to the previous quarter. France thus joins the group of eurozone economies facing significant growth challenges.
“There is deep disappointment in the French services sector. The HCOB Services PMI fell by around 7 points in September to 48.3, after a month boosted by strong demand due to the Olympic Games in France. Particularly affected in September were new orders from both domestic and international suppliers, as well as backlogs of work. Stable employment levels and easing price pressures remain a bright spot. Although input prices continued to rise, they did so at a slower pace than in the previous month. Notably, despite the weakness in the sector, service providers remain cautiously optimistic about the future, although this optimism is well below the historical average.
“The year seems to have been lost for French factories. The preliminary manufacturing PMI showed a slight improvement in September, rising to 44.0 points, but it remains deep in recession territory. Output is contracting at the fastest pace since the beginning of the year, and new orders continue to fall. As a result, employment has contracted. The situation remains gloomy, and industrial companies lack optimism. Orders from North America and key European markets such as Germany are particularly affected. Politically, the situation remains unstable following early elections and the appointment of Michel Barnier as prime minister, with no clear parliamentary majority to push through important economic reforms that could revive industry.”