French manufacturing outperforms first estimate in January

France's manufacturing sector grew by more than anticipated in January, as companies hired additional staff, survey results from S&P Global showed on Monday.

The Hamburg Commercial Bank France manufacturing purchasing managers' index rose to 51.2 points in January, beating the flash reading of 51.0 points and up from 50.7 points in December. Growing further above the neutral 50-point mark separating growth from contraction, it indicates the pace of growth in France's manufacturing sector sped up in January.

January's PMI reading indicated the quickest increase in production in almost four years, S&P highlighted. It was the first time since May that output levels climbed.

Factory purchasing activity rose, while firms added to their pre-production inventories and hired additional staff.

Less positively, S&P Global said: "The level of new work received from external markets decreased solidly during the latest survey period - a contrast from December's uplift. Panellists linked the fall to competition, geopolitical tensions and less interest from clients in key foreign markets such as Germany."

Hamburg Commercial Bank junior economist Jonas Feldhusen said: "Additional signs of stabilisation are emerging in purchasing and input stocks. French manufacturers have increased both their purchasing volumes and their stocks of inputs simultaneously – again for the first time in almost four years. Against this backdrop, business expectations have stabilised over the past three months and now stand above their long‑term average. Meanwhile, supplier delivery times extended, reflecting a mix of factors such as adverse weather, material shortages, and delays on international shipments.

"On the price front, input prices are rising only moderately, driven primarily by higher costs for metals and metal products. Pricing power, however, appears limited as manufacturers lowered their selling prices again, as has been the case in recent months, likely in an effort to maintain sales volumes amid intense competition. Prices for intermediate goods, in particular, have seen a marked decline."

The PMI survey draws upon a panel of 400 manufacturing companies based in France, with responses collected between January 12 and 23.

Final French services and composite PMIs will be released on Wednesday.