- Prior 50.1
It’s just a minor downgrade to the final estimate as France’s manufacturing sector continues to stagnate in light of the Middle East conflict. The two biggest things to note are that suppliers’ delivery times and input cost inflation both surged significantly on the month.
The former lengthened to its greatest degree since January 2023 while the latter saw a steep increase to its highest since December 2022.
Besides that, demand conditions also waned further with international customer demand seeing its steepest deterioration
since July last year. That alongside an already weak domestic market sentiment.
HCOB notes that:
“The March PMI revealed an immediate impact from
the war in the Middle East. The survey data, collected
between 12-24 March, imply a rapid supply-side
squeeze from the conflict as delivery times lengthened
substantially and input costs soared. The passthrough
to output prices appears to be fairly contained at this
stage. This could be due to an unfavourable demand
environment limiting French producers’ pricing power,
although firms may also be stalling price increases
in the hope that there is a quick resolution to the war
that brings with it a normalisation of supply and price
conditions.
“The uncertainty from the war in the Middle East has
also led clients to postpone or cancel orders, leading
sales volumes to contract more sharply and production
levels to decline for the first time in the year-to-date.
Clearly, the longer this war is drawn out for, the greater
are the chances of France’s manufacturing sector
slipping into stagflation.”
This article was written by Justin Low at investinglive.com.
