Manufacturing Drives French Economic Boom

French Flag

Aug 24, 2017

Recent economic indexes indicate that French manufacturing unexpectedly expanded at its fastest rate since 2011. France, buoyed by manufacturers like energy giant Total (which recently pulled the trigger on a key $7.4 billion acquisition), Sanofi Pharmaceuticals, and automaker Renault, is experiencing a significant economic recovery and solidifying its place as Europe’s second-largest economy.

A Purchasing Managers’ Index for French manufacturing rose to 55.8 percent in August from a reading of 54.9 in July, according to IHS Markit. This PMI reading is also more than six points higher than one year ago. A reading below 50 indicates contraction in the market, while a reading above 50 indicates growth. It was the 10th consecutive month with readings above 50.

Reports indicate that the recent election of Emmanuel Macron to lead the country has helped bolster economic momentum. France is experiencing its strongest continuous period of expansion since 2011. In particular, output and new order growth have hit their highest marks in years. The next step will be to address a lagging employment rate as the country looks to keep pace with its European siblings.

The EU is in a bit of transition as it adjusts to BREXIT, the U.S. abandonment of the TPP, and the recent expansion of trade agreements in Mexico and Asia. The ability to rely on the traditional economic stability of countries like France and Germany will be key in keeping the union viable as it continues to address economic uncertainties with a number of other members, including Greece and Italy.