FRANCE

摘要

Ahead of the preliminary release of Q2 GDP on August 14 (after our survey deadline), sentiment about the outlook remains depressed. Manufacturing is of particular concern. After falling by 0.2% (m-o-m) in April, manufacturing orders in May declined by a further 1.4%, pulled down in large part by a 3% monthly collapse in orders from abroad. Sales of French goods and services have not been helped by an uncertain external environment, particularly amongst France's closest European trading partners. On the upside, following a 2.3% (m-o-m) contraction in May, production recovered slightly in June, by+1.6%, bringing the y-o-y rate from -2.6% in the previous month to a better (but still muted) +0.1%. Looking ahead, July's manufacturing PMI worsened on the back of plunging output and orders. Pierre Gattaz, president of France's business federation Medef, has urged an end to the 35-hour week and to the 75% tax rate on annual salaries above €100,000, arguing that these elements in particular are damaging French competitiveness. Despite the government's efforts to roll out supply-side reforms and a "responsibility pact" which reduces payroll taxes in order to encourage hiring, the economy continues to falter and underperform. Unemployment in France and its overseas territories has already soared above the 10% threshold. Inflation, meanwhile, was flat m-o-m for a third straight month in June, underscoring deflationary pressures and threatening the government's precarious budget-deficit reduction aims.