- Prior 49.8
A marginal revision higher but it still points to a renewed downturn in the French manufacturing sector to wrap up Q2. Falling new orders amid muted demand conditions remain the main concern as it has been since last year. HCOB notes that:
“Over the course of 2025, the headline HCOB PMI for France’s manufacturing sector had shown a marked improvement,
edging closer to the expansion threshold by May. However, this positive momentum came to a halt in June, with the
headline manufacturing index declining for the first time this year. The deterioration can largely be attributed to two key
subcomponents. First, output contracted again after two consecutive months of modest growth, with several panellists citing
persistent weakness in the automotive sector as a contributing factor. Second, domestic demand—which had exhibited a
clear recovery trend since the beginning of the year—saw a notable loss of momentum in June. As a result, the fragile
recovery path of French manufacturing has suffered a significant setback. The key question now is whether this represents a
temporary correction or the premature end of a hard-won rebound.
“Looking ahead, there are still reasons for cautious optimism. Despite the decline in the headline index, future output
expectations continued to improve in June, extending their upward trajectory. This optimism likely reflects a combination of
factors: the European Central Bank’s recent monetary easing, planned increases in defence-related investment, and EUlevel initiatives aimed at reducing regulatory burdens. Labour market dynamics, however, remain subdued. The employment
subindex has hovered around the neutral 50 mark for the fourth consecutive month, suggesting stagnation in industrial hiring
activity.
“Price developments present a mixed picture. Output prices declined marginally for the fourth month in a row, likely reflecting
ongoing competitive pressures. At the same time, input prices remained above the growth threshold, indicating continued
cost increases
