- Prior 48.2
Key Findings:
- Contractions in total and new export orders ease sharply since July
- Slight pick-up in confidence, but expectations remain subdued
Comment:
Commenting on the PMI data, Jonas Feldhusen, Junior Economist at Hamburg Commercial Bank, said:
“The contraction phase in French manufacturing now appears to be over. In August, the sector recorded an improvement in
conditions for the first time in over two years. France thus seems to be assuming an increasingly stabilizing role for the
Eurozone’s manufacturing sector – according to the latest PMI data. Nonetheless, the situation remains fragile in light of
numerous challenges such as tariffs and intense international competition. Still, the conclusion of the US-EU tariff agreement
has established a clearer trade framework, and the resulting reduction in uncertainty is likely to have restored a minimum
level of planning security for businesses.
“Employment saw a surprising uptick in August, lending support to the overall headline Manufacturing PMI. It is also
encouraging to note that the declines in demand and production have noticeably eased. These impulses are promising,
though they should be interpreted with caution. The rise in employment was primarily driven by an increase in temporary
contracts and temporary work, anecdotal evidence revealed.
“In purchasing and inventory management, no sustainable recovery is yet visible. Companies have been reducing
purchasing volumes for over three years. At the same time, delivery times worsened, possibly due to tariff-related factors,
which, combined with reduced purchasing activity, is leading to a drawdown in inventories.
“The sharp increase in input costs
this month has likely prompted firms to tighten their inventory strategies. Anecdotal evidence suggests that the cost
increases are mainly attributable to higher wages and raw material prices. However, intense competition is making it difficult
for producers to pass these costs on to end customers.”
This article was written by Justin Low at investinglive.com.