PARIS (Reuters) – Activity in the manufacturing sector in France has further weakened in June, impacted by a production contraction and a more marked decrease in new orders, shows Tuesday a conjuncture survey with companies.

The final manufacturing PMI of the S&P Global and HCOB survey was 48.1 in June, against 47.8 in the first estimate and 49.8 in May. The economists interviewed by Reuters were an average of 47.8.

The 50 bar separates growth and contraction of activity.

French industrialists have faced competitive pressures, which led to a reduction in selling prices for the fourth consecutive month, despite a slight increase in the costs of inputs due to the rise in prices of raw materials and energy, the survey indicates.

The new orders have decreased to the fastest rate for four months, with low demand on the national and international markets, notes S&P Global.

For Jonas Feldhusen, economist at Hamburg Commercial Bank, the recovery of expenses in the defense sector and the monetary recovery measures of the European Central Bank (ECB) could however support the manufacturing sector in the future, even if challenges remain.

“Firstly, production again contracted after two consecutive months of modest growth, several people surveyed citing as a contributory factor the persistent weakness of the automotive sector. Second, domestic demand-which had displayed a clear trend in the recovery since the beginning of the year-experienced a clear slowdown in June,” he said.

“Consequently, the fragile resumption of the French manufacturing sector has undergone an important setback. The key question is now whether it is a temporary correction or the premature end of a hard-acquired rebound,” he added.

(Written by Sudip Kar-Gupta, Claude Chendjou, edited by Augustin Turpin)

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