French factory activity contracts in Aug at fastest pace since Jan, PMI shows

PARIS (Reuters) - France's manufacturing activity contracted at its fastest pace since January in August, as output and new orders fell sharply, a survey showed on Monday.

The HCOB France Manufacturing Purchasing Managers' Index (PMI), compiled by S&P Global, dropped slightly to 43.9 in August from 44.0 in July. Any reading below 50 indicates a contraction.

"The state of the French manufacturing sector is deteriorating," said Norman Liebke, economist at Hamburg Commercial Bank AG. "What seemed like a recovery of the industrial sector at the start of 2024 turned out to be just a brief uptick."

New orders fell at the joint-fastest pace since May 2020 - when the COVID-19 pandemic was battering activity across Europe, driven by lower sales both domestically and abroad. Export demand weakened significantly, particularly from Europe and the Americas, contributing to the downturn.

For the first time since January, the 12-month outlook turned pessimistic, with political uncertainty cited as a major concern.

French manufacturers also cut jobs for the 15th consecutive month, with employment levels shrinking at a slightly softer rate than in July.

Despite a slight cooling in input price inflation, French manufacturers raised their selling prices at the quickest pace since March 2023. Supplier delivery times lengthened further, partly due to continued disruptions to shipping in the Red Sea.

(Reporting by Tassilo Hummel; Editing by Hugh Lawson)