France factory output in April bolstered by stockpiling while price pressures intensify

Manufacturing PMI 52.8 vs 52.8 prelim Prior 50.0 The final report reaffirms a pick up in both output and new orders, increasing at the fastest pace since 1H 2022. All of this of course is linked to stockpiling as clients are rushing with advanced ordering in anticipation of price increases and availability issues. So again, this comes with a caveat - much like the Spain report. The details are also less optimistic as French goods producers continued to widely report supply chain disruptions. Adding to that, capacity constraints are becoming more evident with the steepest rise in backlogs of work since February 2022. And in terms of inflation pressures, there was another considerable uplift in the rate of input price inflation. Of note, selling prices also picked up by the most since February 2023. Trouble, trouble. HCOB notes that: "Order books and production lines in France's manufacturing sector enjoyed a welcome boost in April as clients front-loaded their purchases in anticipation of price increases and supply disruption. A rise in backlogs of work also raises the odds of this upturn having legs to continue throughout the quarter. "That being said, we have seen before how capacity crunches can quickly morph into a broader inflation problem. French manufacturers have suffered from a lack of pricing power over the last two years or so due to persistently weak demand conditions and international competition. This may be why firms absorbed a large portion of the rise in their costs during April, but passing this on becomes a lot easier when order books are filling up. These developments need to be watched carefully from a policymaking perspective." This article was written by Justin Low at investinglive.com.