French Companies Shrug Off Election Concerns and Boost StaffBy
Composite PMI rises to highest level in almost six years
Report comes two days before first round of election
French manufacturers and service providers boosted staffing numbers in a sign of optimism that this weekend’s elections won’t disrupt progress in the euro area’s second-largest economy.
A composite Purchasing Managers’ Index unexpectedly surged to 57.4 in April from 56.8, IHS Markit said on Friday. That’s the highest reading in almost six years and compares with economists’ forecasts for a decline to 56.2. Gauges for employment, job creation and business expectations all strengthened as companies bet on favorable post-election economic conditions.
“The numbers provide further evidence that the French private sector remains resilient to political uncertainty around the upcoming presidential election,” said Alex Gill, an economist at London-based IHS Markit. “Indeed, business optimism hit a multi-year high in April, with a number of respondents anticipating favorable business conditions following its conclusion. This has, in turn, encouraged firms to take on additional staff members.”
France’s centrist former economy minister Emmanuel Macron is narrowly leading opinion polls ahead of the first round of presidential elections on April 23, followed closely by nationalist Marine Le Pen, who has campaigned on an anti-European Union platform. Surveys predict she would lose the final run-off on May 7, whoever she faces, yet uncertainty ahead of the vote has caused French sovereign-debt yields to spike in a potential complication for European Central Bank policy.
Most candidates halted campaigning on Friday after the murder of a policeman on the Champs-Elysees in Paris. No campaigning is allowed on Saturday, the day before the vote.
While service sector activity remained the overall driver of French growth in April, according to IHS Markit, manufacturing was also supported as the relatively weak euro buoyed demand for French goods.
Manufacturing and services activity in Germany probably slowed in April, with an index due for publication at 9:30 a.m. Frankfurt time forecast to drop to 56.8 from 57.1. Economists predict a similar gauge for the euro area will remain unchanged at 56.4. That data is due at 10 a.m.
— With assistance by Mark Evans, and Harumi Ichikura