- Prior 50.7
French manufacturing activity picked up to start the year with the headline reading being a 43-month high. After a seven-month spell of decline, manufacturing output rose across France in January. The growth was attributed by firms to improving market conditions and
restocking. The good news also is that employment conditions rose once more, marking back-to-back months of jobs growth. HCOB notes that:
“France’s manufacturing industry is starting the year on a firmer footing. The headline index continued to rise and now points
to growth for the second consecutive month – the first time this has happened in almost four years. Whether this truly marks
the end of the sector’s prolonged period of weakness remains to be seen. In January, stronger production dynamics were
the main driver supporting the headline index. Panellists attributed this partly to improving market conditions and partly to
inventory building. However, without a significant improvement in new orders, it would be premature to declare a sustained
recovery. Although the trade environment remains unsettled by existing tariffs, the reverberations from new U.S.
announcements are far less disruptive than they were a year ago. At the same time, Europe’s efforts to strengthen its
strategic autonomy in defence policy are gaining traction. Together, these two key developments could provide a boost to
the manufacturing sector in 2026.
“Additional signs of stabilisation are emerging in purchasing and input stocks. French manufacturers have increased both
their purchasing volumes and their stocks of inputs simultaneously – again for the first time in almost four years. Against this
backdrop, business expectations have stabilised over the past three months and now stand above their long‑term average.
Meanwhile, supplier delivery times extended, reflecting a mix of factors such as adverse weather, material shortages, and
delays on international shipments.
“On the price front, input prices are rising only moderately, driven primarily by higher costs for metals and metal products.
Pricing power, however, appears limited as manufacturers lowered their selling prices again, as has been the case in recent
months, likely in an effort to maintain sales volumes amid intense competition. Prices for intermediate goods, in particular,
have seen a marked decline.”
This article was written by Justin Low at investinglive.com.