The manufacturing industry in France is showing improvement, and it appears that the contraction phase has ended.

Jonas Feldhusen, economist at Hamburg Commercial Bank, stated that the contraction phase of French manufacturing seems to have come to an end. In August, the industry showed signs of improvement for the first time in over two years. According to the latest PMI data, France appears to be playing an increasingly stable role in the manufacturing sector of the Eurozone. However, the situation remains fragile in the face of challenges such as tariffs and intense international competition. Nevertheless, the agreement reached between the US and the EU on tariffs has established a clearer trade framework, reducing uncertainty and likely providing some level of planning security for businesses. Additionally, unexpected growth in employment in August provided some support for the overall manufacturing PMI data. It is worth noting that the decline in demand and output has slowed significantly. While these signs are encouraging, caution is still needed in interpretation. There is no sustainable sign of recovery in procurement and inventory management. Firms have been reducing their procurement for over three consecutive years. At the same time, delivery times have worsened, possibly due to tariff-related factors, which, combined with reduced procurement activity, is leading to further depletion of inventory.