French manufacturers are seeing more signs of stability in December as supply chain pressures abate and new purchasing activity increases, according to data released today by HIS Markit.
The monthly survey of French manufacturers also showed a marginal increase in manufacturing output during December and improved sales performances.
IHS Markit said its purchasing managers’ index (PMI) for France dipped to 55.6 points, down slightly from 55.9 points reported in November.
The PMI is a weighted aggregate that measures new orders, output, employment, suppliers’ delivery times and stock of purchases. Readings above 50 are considered positive as they indicate a rise in activity.
More optimism
Joe Hayes, senior economist at IHS Markit, said the latest PMI survey gave a few reasons for optimism, adding: “The Suppliers’ Delivery Times Index registered a meaningful move higher in December.
“We’re by no means anywhere near out of the woods yet, and a large portion of our survey panel are still seeing shortages and increasing lead times, but there were some reports of improving stock levels at vendors.”
More new orders
French manufacturers registered back-to-back increases in new orders during December – with the rate of expansion quickening to a four-month high according to IHS Markit.
Hayes said firms took advantage: “[W]e saw purchasing activity growth accelerate and stocks of purchases accumulate to the fastest extent on record, which will certainly help firms increase production levels.”
We also saw continued hiring across the sector, despite anecdotal evidence suggesting that demand conditions still remain subdued. Manufacturers expect order books to begin filling a lot faster as the supply situation improves.”
Hayes said the stabilisation of the output and new order indices following the harsh slowdown in the second half of 2021, combined with some alleviation of supply-side constraints, suggests improved growth rates in 2022.
Country performance
Despite some improvements and increased optimism, the IHS’ Markit Eurozone PMI report showed that France languished at the bottom end of the scale as its goods-producing sector saw the weakest growth out of the eight monitored nations.
Italy retained the top spot and posted another month of steep growth during December. The IHS Markit Italy Manufacturing PMI was 62.0, slightly below November’s all-time high of 62.8.
However, this, in turn, resulted in an increase in backlogs due to supply issues that Italy is still experiencing.
Meanwhile, German manufacturers are also more optimistic about growth prospects in 2022 as the country experienced an easing of lengthy lead times. Germany also expects to see an improvement in supply chain issues and an increase in demand.
Read more: EU growth disappointing despite supply issues easing says PMI
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