France manufacturing sector weakens amid political deadlock

France's manufacturing economy fell into decline last month, a purchasing managers' index reading showed on Wednesday, hurt by political uncertainty.

The Hamburg Commercial Bank's manufacturing PMI fell to 48.2 points in September, from 50.4 in August.

Though the reading was a hair above the flash estimate of 48.1, it landed below the 50 point threshold that separates growth from decline.

"After showing tentative signs of recovery in prior months, the end of the third quarter saw steeper contractions in output and new orders, while year-ahead expectations slipped to their lowest since January after political uncertainty was pushed higher," survey publisher S&P Global said.

In September, Francois Bayrou lost a parliamentary confidence vote after less than nine months as prime minister, stepping down as head of the minority government.

S&P Global added: "New orders decreased at a broadly similar rate to output during September. Underlying data revealed that the investment goods sub-sector saw the weakest trends in both production and sales, out of the three main industrial categories. Some panel members cited political uncertainty as a reason for lower new business intakes. Exports were also a drag on overall orders during the latest survey period, with companies mentioning US tariffs and generally sluggish market conditions as reasons for lower overseas demand."

There was a "moderate rise" in input costs, S&P Global said.

"Prices charged were discounted, however, as survey respondents noted competitive pressures and efforts to stimulate sales," S&P Global said.

S&P Global analyst Jonas Feldhusen said expectations for the future weakened.

"The combination of subdued demand, rising costs, and pricing pressure underscores the challenging environment manufacturers are currently navigating. In this context, it is hardly surprising that companies are growing less optimistic about the future, as indicated by a drop in the future output index," Feldhusen said.

The PMI survey features a panel of around 400 manufacturers in France. Responses were collected between September 11 and 23. The composite and service sector readings are due out on Friday.