French manufacturing contracts at slowest in two years

The HCOB France Manufacturing PMI rose to 48.5 in March 2025, slightly below initial estimates of 48.9 but up from 45.8 in February.

French manufacturing contracts at slowest in two years

While the sector remained in contraction, the latest data pointed to the mildest downturn in over two years, suggesting that manufacturing conditions were gradually stabilizing. Output and new orders declined at their slowest pace in nearly three years, supported by continued growth in the consumer goods sector and stronger demand from key export markets in Africa and Asia. Despite these improvements, firms remained cautious and continued to implement cost-cutting measures, albeit at a softer pace. Employment levels declined as manufacturers sought to streamline operations, while purchasing activity and inventories were also reduced to manage costs more effectively. However, the rate of job losses was slower than in previous months, indicating that businesses were becoming slightly more optimistic about future demand.

Cost pressures intensifies

Cost pressures intensified, with input prices rising at the fastest rate in seven months. A stronger dollar made imported materials more expensive, while suppliers raised prices due to ongoing supply chain constraints. However, in a bid to remain competitive and stimulate demand, manufacturers continued to lower output prices, marking the fifth reduction in six months. Looking ahead, business confidence improved to a nine-month high, reflecting growing expectations of a gradual recovery in the manufacturing sector. However, concerns over geopolitical uncertainty, fluctuating raw material costs, and potential weakness in client spending continued to weigh on sentiment, keeping optimism somewhat restrained. While the latest data suggests an improving outlook, manufacturers remain wary of external risks that could impact the pace of recovery in the coming months.