French manufacturing slump eases in May, but still dire

Toyota employees wear protective face masks while working at the car manufacturing plant where the Yaris model is assembled for the European market in Onnaing, near Valenciennes, northern France. EPA-EFE/SEBASTIEN COURDJI

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France’s manufacturing activity rose in May as the country began to emerge from a nearly two-month coronavirus lockdown, pulling the sector out of a nosedive that had seen activity hit a record low a month earlier, a survey showed on Monday.

Data compiler IHS Markit said its final Purchasing Managers’ Index rose to 40.6 from 31.5 in April. That was slightly better than a preliminary reading of 40.3 though it remained far below the 50-point line dividing expansions in activity from contractions.

The government put France under one of the strictest lockdowns in Europe in mid-March and only began lifting some restrictions on May 11. Further easing is due on June 2.

The PMI survey showed that new orders continued to fall in May, albeit not as much as in April, and that manufacturers eased off on reducing headcount.

“Firms are now presented with an environment of subdued demand, as clients remain hesitant to place orders amid uncertainty over the removal of restrictions and the potential for further outbreaks,” IHS Markit economist Eliot Kerr said.

“Going forward, the new orders index will take on an important role in determining when demand is beginning to recover, and only when that happens can we expect a return to sustainable growth.”

Via Reuters

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