Although both are in decline territory, the mood in the German economy is more optimistic.
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The French economy recorded another sharp decline in business activity in November and has remained on a downward trend since June.
Manufacturing continues to be the main drag on the overall economy, recording its sharpest decline in three years.
The picture is rosier in Germany, with the economic slowdown showing signs of easing in the middle of the fourth quarter as business activity declines at its slowest pace in four months.
The economic outlook is based on the latest estimate of each country’s Purchasing Managers’ Index (PMI) by S&P Global and Hamburg Commercial Bank (HCB), based on variables such as sales, employment, inventories and prices.
In FranceThe global PMI is estimated at 44.5 this month, well below the 50 level that distinguishes growth from decline.
“The French economy is in a bit of a dead end. It looks like geopolitical and economic uncertainty played a big role here,” explained Norman Liebke, economist at HCB.
According to subsector data, there is strong pessimism in the manufacturing sector of the euro area’s second-largest economy, with the purchasing managers’ index for factory production at 42.6, the lowest level since May 2020.
The mood in the French services sector is now more positive, but subdued. The services industry PMI is forecast to reach a three-month high of 45.3 in November. However, little has changed compared to the October value of 45.2.
German economy on the road to recovery
In the euro area’s largest economy, the global PMI was 47.1 in November. Although it is the fifth straight month of contraction below 50, it is up from October’s reading of 45.9 and the highest since July.
“Christmas is just around the corner and with it hope for the German economy,” said Cyrus de la Rubia, chief economist at HCB.
“The collective recovery reinforces our growing confidence that a return to growth territory is a plausible prospect, potentially occurring in the first half of next year,” he added.
Manufacturers’ expectations are improving, but remain pessimistic. Manufacturing PMI is estimated at 42.3 in November, a six-month high, up from 40.8 in October. However, it still shows a obvious contraction.
Activity this month was weighed down by a continued decline in demand for goods and services, with companies highlighting the impact of market uncertainty, tighter financial conditions and customers’ efforts to use up inventory before purchasing.
The services sector is the economic sector closest to the 50 mark, with a PMI of 48.7.
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