Private activity in France sinks to its lowest since 2021 and points to a contraction in GDP, according to PMI

German economy continues to lose momentum, weighed down by weakness in the manufacturing sector


The deterioration of the activity of the private sector in France has registered a noticeable worsening in June, according to the advanced data of the Purchasing Managers Composite Index (PMI), which has fallen to 47.3 points from 51.2 in May, which which represents the worst reading of the reference in 28 months and suggests a contraction of the GDP of the second largest economy in the euro between April and June.

The worsening activity of French companies in June reflects the persistent deterioration in the manufacturing sector, with a PMI reading of 45.5, compared to 45.7 the previous month, at 37-month lows, but also a contraction activity in the service sector, with a PMI of 48 integers, compared to 52.5 in May, at a 28-month low.

“With the new June PMI figures, not only the manufacturing sector, but also services are now expected to contract (…). According to our model, this results in negative growth of -0.5% quarterly”, Norman Liebke, economist at Hamburg Commercial Bank (HCB), warned when, before the PMI data, the forecasts for the second quarter were for a stagnant GDP.

Regarding inflation in the French country, the expert stressed that “fundamentally encouraging signals are being sent”, mainly in the manufacturing sector, although in services it can be seen that the rate of price increase continues to slow down.

On the other hand, the preliminary reading of the PMI for Germany points to a slowdown in the growth of private activity in the largest economy in the euro, weighed down mainly by the contraction in manufacturing.

Specifically, the forward composite PMI for Germany in June stood at 50.8 points, below the 53.9 in May, but still slightly above the 50-point threshold that separates growth from contraction.

In the case of the services sector, the forward PMI has been 54.1 points, compared to 57.2 in May, its worst reading in three months, while the manufacturing PMI has fallen to 41 points from 43.2 in the previous month, its worst result in 37 months.