European PMI day: France is holding everyone else back


A French soccer fan smokes a cigarette as he watches the 2014 World Cup soccer match between France and Switzerland on a large screen at Copacabana beach in Rio de Janeiro, June 20, 2014.

REUTERS/Pilar Olivares

France is up there.

It's PMI day in Europe.


The performance of France, the eurozone's second largest economy, is worrying.

The country's manufacturing sector was stagnant in January, pointing to big problems in the country's manufacturers.

Overall, the picture for the euro area isn't looking great, with Italy missing forecasts by a big margin, and growth in France flat, showing absolutely no increase in January.

PMI readings give an industry a score between 0-100, with anything above 50 signalling growth, and anything below showing a contraction.


The big story on Monday morning was a disappointing month for France, which as the second largest economy in the Eurozone, is crucial to the economic performance of the euro area.

Jack Kennedy, a senior economist at Markit said:

French manufacturing growth ground to a halt at the start of 2016, ending a run of modest expansion seen towards the end of 2015. A drop in new orders for the first time in four months was the primary culprit, as a generally weak demand climate and client uncertainty continued to weigh on new work inflows.

France's manufacturers ended four months of moderate growth in January, grinding to a halt and signalling just how big France's problems are right now.

In January, Societe Generale Analyst Albert Edwards pointed to France, and particularly its unemployment problem, as a key reason that in his words "The Eurozone is failing". Here's the chart:

Albert Edwards France

Societe Generale


On Monday morning, we also got data from Italy, Germany, Greece, and the Eurozone as a whole, while UK manufacturing is coming up later.

Here's how things look across the manufacturing sectors of Europe's biggest economies:

  • Italy - 53.2,1.8 points lower than economist forecasts, with the economist consensus putting the country at 55, down from 55.6 in December.
  • France - 50, just meeting economist forecasts, and stagnant at the same level as December.
  • Germany - 52.3, a minor beat on economist forecasts of 52.1, and flat from the same point in December.
  • Greece - 50, down from 50.2 in December.
  • Eurozone - The euro area as a whole just about met expectations, getting a score of 52.3, meeting forecasts, and staying flat on December.

Italy, the Eurozone's third biggest economy saw a big miss, hitting just 53.2, Essentially, Italy's manufacturing sector is still growing, just nowhere near as quickly as expected, while France's manufacturers are pretty stagnant.

Earlier on Monday, China's official PMI data missed expectations by 0.2 points, hitting 49.4, down from 49.7 in December, and missing the 49.6 target expected by economists.

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