France: PMI forecast indicators very negative. Are you heading towards a recession?
Isn't it that France enters a recession without showing it too much? I think so, and the forecast indices are starting to send worrying signals.
The HCOB France Composite PMI fell to 46.6 in July 2023 from 47.2 in June, below forecasts of 47.8, according to preliminary estimates.
The reading indicated the largest contraction in private sector activity since November 2020 , with manufacturing and services output falling for the second month in a row, although industrial production continued to decline at a markedly stronger pace than services activity, due to weak demand and as customers are put off by higher prices.
Meanwhile, total new order inflows fell the furthest in more than two-and-a-half years, while weaker sales meant companies relied more heavily on backlogs to support activity levels.
Despite this distrust, private sector businesses have continued to increase the number of their workforce. On the price side, input cost inflation and output price inflation eased to 28-month and 27-month lows, respectively. Finally, there has been a strengthening in business confidence amid growth expectations for recent hiring activity, particularly in the services sector. Here is the related graph
As we can see, the attitude of French managers has changed abruptly since June: if initially there was a discrete confidence in the economic expansion, subsequently instead a distrust began to be created which was growing and higher than expected. It seems clear that those who manage companies see signals that are not yet captured by the macro-economic systems, especially in terms of orders.
Why is employment growing? Because, probably, the companies are still completing expansion and hiring programs made in the previous months, when the orders existed and were sufficient to justify them. But layoffs can be very rapid.
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The article France: PMI forecast indicators very negative. Are you heading towards a recession? comes from Economic Scenarios .
This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/francia-indicatori-previsionali-pmi-molto-negativi-va-verso-la-recessione/ on Mon, 24 Jul 2023 09:17:14 +0000.