Live Updates > Live Update Details
2026-02-20 16:24:33
[French PMI Reveals the Truth Behind Stagnation, Unexpected Manufacturing Slowdown Raises Concerns] ⑴ The French private sector remains mired in growth difficulties. The preliminary HCOB composite purchasing managers' index rose slightly to 49.9 in February, higher than expected and the final reading in January, but has hovered around the 50-point threshold for several months. Economists at Commerzbank in Hamburg pointed out that since November of last year, the index has failed to achieve a substantial breakthrough, and growth momentum remains lacking. ⑵ A brief recovery in the service sector cannot mask the overall weakness. The services PMI rose to 49.6 in February, a two-month high and better than market expectations, but it has remained in contraction territory for the second consecutive month. This means that the service sector, which dominates the economy, has not yet escaped its slump, and the foundation for recovery is not solid. ⑶ The performance of the manufacturing sector, however, unexpectedly slowed down. The manufacturing PMI plummeted from 51.2 to 49.9 in February, falling below the 50-point threshold and far below the market expectation of 51.0. This contrast indicates that the industrial sector, which previously supported the French economy, is facing headwinds and has become the main factor dragging down overall performance. ⑷ The contraction in demand is accelerating its transmission to the job market. New business inflows contracted for the third consecutive month, with the largest decline since July of last year, as weak exports significantly dragged down orders. Employment stalled after several months of growth, with job cuts in manufacturing offsetting modest growth in the service sector, indicating that cautious business sentiment is translating into actual hiring decisions. (5) Price signals are complex. Service companies are employing discount strategies, while manufactured goods prices are rising at their fastest pace in a year and a half. Composite sales prices fell for the first time in three years, while input cost inflation slowed to a four-month low. This divergence reflects differences in pricing pressures and demand elasticity across industries, adding uncertainty to the future path of inflation.
