France: Strong decline in new orders in the manufacturing sector since January (PMI index) – 08/01/2025 at 11:33

The new orders received by French manufacturers have greatly fell in July, the PMI index still located in the contraction zone, according to data published Friday by S&P Global and the commercial Hamburg Bank (HCOB).

The PMI index remained stable at 48.2 in July, close to the level of June to 48.1, a sign of moderate deterioration in the activity of the French manufacturing sector.

This quasi-stagnation, however, masks “the worrying orientation of certain sub-indexes”, in particular that of new orders, according to a press release published on Friday. S&P Global and HCOB do not, however, precisely quantify this drop in new orders, the main component of the overall index (30%).

“The volume of new orders received by the manufacturers fell sharply in July”, the contraction having “accentuated compared to June and having posted its highest rate since last January”.

Several elements explain this drastic decline: the “reluctance of customers”, in particular due to the increase in customs duties in the United States, the “weak demand on French markets”, and the “decrease in export orders”, according to S&P Global and HCOB.

The latest figures for manufacturing activity bear witness to “growing uncertainty”, “a probable consequence of tensions weighing on international trade and drastic budgets presented recently by Prime Minister François Bayrou,” said Jonas Feldhusen, HCOB economist.

“The current political context, not very conducive to investment, may indeed cause cancellations or reports of orders,” he continues.

Thus, activity prospects are strongly folded up for the next twelve months, “the optimism of French manufacturers having dropped to its lowest level since last February”, according to the press release.

In May, the manufacturing sector had come closer to the recovery, with a PMI index of 49.8.

For 2025, INSEE provides a net brake for French growth, with an increase in gross domestic product (GDP) at 0.6% after 1.1% in 2024, in a context of budgetary restrictions and global economic uncertainty.