French factory activity shrinks in December at fastest pace since mid-2020, PMI shows

By Sudip Kar-Gupta

PARIS (Reuters) - France's manufacturing activity contracted in December at the fastest pace in more than four years, a monthly survey showed on Thursday, highlighting the headwinds facing the euro zone's second-biggest economy.

S&P Global said its HCOB final purchasing managers index (PMI) for the French manufacturing sector fell to 41.9 in December from 43.1 in November. The final reading matched an earlier flash PMI figure and was the lowest since May 2020.

Any reading below 50 points to a contraction in activity, while above 50 shows an expansion.

"The French industrial crisis deepens. The HCOB PMI for manufacturing has once again sent negative signals in December," said Hamburg Commercial Bank economist Tariq Kamal Chaudhry.

"2025 is unlikely to be easier. Surveyed companies have little hope for the new year. Future output expectations for the next twelve months remain negative," he added.

The French economy has been hit in recent months by political volatility as opposition to a planned budget resulted in the collapse of Michel Barnier's government. Barnier has been replaced by Francois Bayrou as Prime Minister.

(Reporting by Sudip Kar-Gupta; Editing by Hugh Lawson)