French manufacturing edged closer to growth in May, final PMI shows

By Sudip Kar-Gupta

PARIS (Reuters) -France's manufacturing activity almost returned to growth in May as factory output increased for the second consecutive month, according to the HCOB France Manufacturing final Purchasing Managers' Index (PMI) compiled by S&P Global.

The final manufacturing PMI rose to 49.8 in May, up from 48.7 in April and edging closer to the 50.0 mark that separates contraction from expansion. This improvement reflected accelerated production growth and a rise in business confidence, which reached its highest level in 39 months.

The final May manufacturing PMI number was also slightly better than an earlier flash May manufacturing PMI figure of 49.5 points.

"Since 2023, France's manufacturing sector has been in a state of contraction. This is evident in our HCOB Manufacturing PMI, which has remained consistently below the no-change threshold of 50.0 since February 2023. However, a turning point may be near," said Jonas Feldhusen, junior economist at Hamburg Commercial Bank AG.

Feldhusen said French manufacturing could benefit from plans for increased European defence spending and from any interest rate cuts by the European Central Bank.

"Ongoing uncertainty stemming from the global trade conflict continues to act as a non-tariff barrier and will likely weigh on the sector in the months ahead. At the same time, European rearmament initiatives, a more accommodative monetary policy from the ECB, and efforts to reduce regulatory burdens at the EU level could help offset the negative impact of trade restrictions," said Feldhusen.

(Reporting by Sudip Kar-Gupta; Editing by Toby Chopra)