Can France’s Manufacturing Sector Regain its Footing?

German and French manufacturing purchasing managers’ index (PMI) data will be closely scrutinized by investors on Thursday, but it’s France’s manufacturing sector’s poor showing over the past year that has many wondering if the eurozone’s second-largest economy is mired in contraction.

For 11 consecutive months, France’s manufacturing output has contracted. In April, France’s PMI reading of 48 (versus 48.8 in March) was reportedly the fastest rate of decline so far this year. Any PMI reading below 50 denotes contraction.

Despite the relative success the European Central Bank’s (ECB) quantitative easing (QE) program has had to date to weaken the euro against the U.S. dollar, it evidently is doing very little to boost France’s fortunes.

On a brighter note, gross domestic product (GDP) figures released last week in the eurozone surprised to the upside in aggregate. The biggest surprise was not that Germany missed its forecast underperforming at 0.3% versus an expected 0.5%, but rather that France and Italy beat expectations.

France posted 0.6% growth, the highest rate of growth in the Fifth Republic since 2011. Inarguably, Germany will continue to be the engine of growth for the European Union and its GDP miss can be chalked up to current macroeconomic conditions.

Despite the string of poor PMI readings, the fact that French GDP is showing positive signs of late has triggered hope that the end of its stagnation may be near.

ECB Jawboning Weakens the Euro
ECB officials recently made comments about the bank’s €1.1 trillion QE program that impacted the currency market.

Benoît Coeuré and Christian Noyer, French members of the ECB executive board, revealed details that put pressure on the EUR. Coeuré mentioned that the ECB would front-load its debt purchases to avoid an excess of bond buying during the quiet summer trading days.

Noyer, the head of the French central bank, stated that the ECB could go beyond the QE amounts already announced in order to hit its inflation target. The two statements reassured markets of the commitment from European policymakers to stick with stimulus until Europe’s economy shows signs of sustainable growth. In turn, the statements helped weaken the euro against the greenback.

Content is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Business Information & Services, Inc. or any of its affiliates, subsidiaries, officers or directors. If you would like to reproduce or redistribute any of the content found on MarketPulse, an award winning forex, commodities and global indices analysis and news site service produced by OANDA Business Information & Services, Inc., please access the RSS feed or contact us at Visit to find out more about the beat of the global markets. © 2023 OANDA Business Information & Services Inc.

Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza