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French manufacturing picks up in July but new orders stagnate

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French manufacturing activity picked up a touch in July although new orders remained stagnant, a monthly survey showed on Monday, as the euro zone’s second-biggest economy feels the impact of the COVID-19 pandemic.

Data compiler IHS Markit said its final purchasing managers’ index (PMI) for July rose to 52.4 from 52.3 in June, lifting the index further above the 50 point line dividing expansions in activity from contractions.

IHS Markit economist Eliot Kerr said the resurgence in manufacturing activity reflected older, existing orders being carried out rather than new contracts, however.

“French manufacturers saw another improvement in business conditions during July, which was predominantly supported by output growth, much like in June,” said Kerr.

“However, the resurgence in activity has seemingly been driven by the unfreezing of previously existing orders, according to panellists’ comments. This suggests that the recovery in production could be a false dawn, with underlying demand yet to recover,” he added.

Data published in July showed that the French economy contracted by a post-war record of 13.8% in the second quarter, crushed by a coronavirus lockdown, although the drop was shallower than expected and a bounceback in consumer spending offered glimmers of a recovery.

s2.reutersmedia.net

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