The HCOB France Manufacturing PMI rose to 48.7 in April 2025 from 48.5 in March, and was revised upward from the initial flash estimate of 48.2. Although the index remained below the 50.0 threshold that signals expansion, it indicated the mildest contraction in the French manufacturing sector since the current downturn began in February 2023. The improvement reflects growing signs of stabilization, fueled by a modest recovery in production activity and a continued softening in the pace of order book declines.
France factory downturn mildest since early 2023
Most notably, output increased for the first time in nearly three years, led by strength in both consumer and investment goods segments—sectors often seen as early indicators of broader economic momentum. The increase in production, while modest, marks a turning point after a prolonged period of contraction and reflects gradually improving domestic and regional demand conditions. Meanwhile, the decline in new orders eased for the fifth consecutive month, hinting at a bottoming-out in client hesitancy and some return of buyer confidence, particularly within the Eurozone.
Export demand also weakened at the slowest pace since early 2022, despite ongoing headwinds from a strong euro and residual trade tensions globally. French manufacturers reported that while foreign client demand remained fragile, the rate of decline had noticeably slowed, likely supported by improved trade flows within the EU and strategic shifts in supply networks.
Cautious approach to cost management
However, despite these tentative signs of recovery, firms maintained a cautious approach to cost management. Employment continued to fall, extending the job-shedding trend to its ninth straight month, though at a gentler pace. Purchasing activity and inventory levels of both inputs and finished goods were also trimmed further, as businesses sought to align operations with current demand levels and protect margins.
On the pricing front, strong market competition continued to exert downward pressure on selling prices, which were cut again in April, even as input costs edged higher. The rise in input prices was attributed to increased raw material costs and adverse currency effects, possibly linked to euro strength against key import currencies. Additionally, supplier delivery times lengthened, reflecting logistical disruptions from ongoing port strikes, which added friction to supply chains and increased uncertainty around input availability.
Business sentiment rises to an 11-month high
Despite these challenges, business sentiment rose to an 11-month high, underpinned by growing optimism for a sustained recovery in demand. Hopes of a supportive macroeconomic environment—including expectations of a continued accommodative stance by the European Central Bank—contributed to improved confidence across the sector. Looking ahead, the data suggest that while the French manufacturing sector is not yet in expansionary territory, it is moving steadily toward stabilization, with upside potential should demand continue to recover and geopolitical risks remain contained.
