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Those expecting an end of the recession in France got another jolt of reality this morning. The Markit Flash France PMI shows Sharper fall in output at French companies in December.
Key PointsFrance Finance Minister Says Economy has ‘Truly Emerged from Recession’
- Flash France Composite Output Index falls to 47.0 (48.0 in November), 7-month low
- Flash France Services Activity Index drops to 47.4 (48.0 in November), 6-month low
- Flash France Manufacturing Output Index slips to 45.3 (48.0 in November), 7-month low
- Flash France Manufacturing PMI falls to 47.1 (48.4 in November), 7-month low
Both the manufacturing and service sectors signalled sharper reductions in output than in November. Services activity decreased for the second month running, and at the fastest pace since June. Meanwhile, manufacturers posted a marked decline in production, extending the current sequence of contraction to five months. Respondents indicated that lower new orders was behind the fall in output, in turn linked to caution among clients. New business decreased for the third month running.
Staffing levels also continued to decline during December. Employment in the French private sector has fallen in 21 of the past 22 months. The solid reduction in December was reflective of falls across both the manufacturing and service sectors and was mainly linked by firms to a decrease in new orders.
The rate of input price inflation in the French private sector eased from November and remained much weaker than the series average. Manufacturers posted the slowest rise in input costs in three months, while inflation in the service sector was the weakest since July. Companies continued to lower their output prices during December amid reports from panellists of strong competition for new business.
Comment: Andrew Harker , Senior Economist at Markit and author of the Flash France PMI® , said: “The last flash PMI readings for 2013 paint a worrying picture on the health of the French economy. The return to contraction in November has been followed up with a sharper reduction in December, with falling new business at the heart of this as clients were reportedly reluctant to commit to new contracts. Firms will hope that such reticence ends in the new year as they seek to avoid another protracted downturn. ”
Please recall that on December 10, France Finance Minister Says Economy has ‘Truly Emerged from Recession’
I discussed his beliefs the same day in French Industrial Output Drops Unexpectedly; France Finance Minister in Complete Denial; Expect the Unexpected
The data I had on hand to dispute the Finance Minister's optimism was November Markit Data (released on December 4). Now we have "Flash" data for December representing 85% of the survey samples.
Unless the last 15% is an amazing set of numbers, France's Finance Minister, Pierre Moscovici, is off his rocker.
Mike "Mish" Shedlock