France's manufacturing sector contracts again in January - PMI

PARIS (Reuters) - France's manufacturing sector contracted slightly faster in January than first estimated, according to a survey published on Thursday, as businesses were hit by sluggish demand and longer delivery times.

The HCOB France final purchasing managers index (PMI) for the manufacturing sector, compiled by S&P Global, was 43.1 points in January, slightly below a flash manufacturing PMI figure of 43.2 points.

The index hit 42.1 in December, the lowest level for a final manufacturing PMI since May 2020, when France was in the midst of a strict COVID-19 lockdown.

Any figure below 50 points denotes a contraction in activity, while above 50 points indicates an expansion.

"The French manufacturing sector is off to a bad start in the new year (...) This is mainly due to sluggish demand, as also shown by the PMI for new orders. Subsequently, our HCOB Nowcast points to a further contraction in the manufacturing sector in the first quarter of 2024, " said Norman Liebke, economist at Hamburg Commercial Bank AG.

"The attacks in the Red Sea are leaving their mark. In January, the PMI for delivery times deteriorated by almost five points (...) If the Red Sea is avoided as a trade route in the coming months, this could have consequences in the form of price increases," he added.

The French economy failed to grow in the fourth quarter, preliminary data from the INSEE statistics agency showed on Tuesday, in line with analyst expectations.

In December, INSEE forecast growth of 0.2% in both the first and second quarters of 2024, even though falling inflation will give a boost to consumers' purchasing power.

(Reporting by Benoit Van Overstraeten; editing by Christina Fincher)