The latest Manufacturing PMI for France, released on December 1, 2025, registered at 47.80, unchanged from the November reading but below the 50 threshold that separates expansion from contraction. This figure aligns with the Sigmanomics database’s recent trend showing subdued manufacturing activity amid a challenging macroeconomic environment.

Drivers this month

• Supply chain delays persisted, limiting production capacity.
• Domestic demand remained cautious due to inflationary pressures.
• Export orders weakened amid global trade uncertainties.

Policy pulse

The PMI remains below the neutral 50 mark, signaling contraction that complicates the Banque de France’s inflation-targeting efforts. The central bank’s recent rate hikes aim to temper inflation but risk further dampening manufacturing output.

Market lens

Following the release, the EUR/USD currency pair saw a mild depreciation of 0.15%, reflecting market concerns over slower industrial growth. Short-term yields on French government bonds edged higher, pricing in persistent economic headwinds.

Manufacturing PMI is a leading indicator of industrial health and economic momentum. France’s current PMI of 47.80 compares unfavorably to the 12-month average of 48.70 and the September peak of 50.40, highlighting a clear downward trend over the past quarter.

Monetary policy & financial conditions

With the European Central Bank maintaining a hawkish stance, borrowing costs have risen. The tightening cycle, reflected in higher short-term interest rates, constrains capital investment in manufacturing. The Sigmanomics database shows a correlation between rising policy rates and PMI declines over the past year.

Fiscal policy & government budget

France’s fiscal policy remains cautious, with limited stimulus measures to support manufacturing. Budgetary restraint amid high public debt levels restricts government capacity to offset private sector weakness.

External shocks & geopolitical risks

Ongoing geopolitical tensions in Eastern Europe and supply chain disruptions from Asia continue to pressure French manufacturers. Energy price volatility also adds cost uncertainty, affecting margins and investment decisions.

Market lens

Immediate reaction: EUR/USD dipped 0.15% within the first hour post-release, while French 2-year bond yields rose 5 basis points, reflecting investor caution on growth prospects.

Looking ahead, the manufacturing sector faces a complex mix of headwinds and potential tailwinds. The baseline scenario forecasts continued contraction with PMI hovering near 47–48 over the next quarter (60% probability). This assumes persistent inflation, cautious consumer spending, and ongoing supply chain challenges.

Bullish scenario (20% probability)

• Inflation moderates faster than expected, easing cost pressures.
• Supply chains normalize, boosting output and new orders.
• Global trade stabilizes, supporting export growth.

Bearish scenario (20% probability)

• Energy prices spike due to geopolitical tensions.
• ECB tightens monetary policy further, raising borrowing costs.
• Domestic demand weakens sharply amid recession fears.

Policy pulse

Monetary policy will remain a key determinant. Any pivot by the ECB toward easing could provide relief, but current signals suggest continued vigilance against inflation.

France’s manufacturing PMI data for December 2025 confirms a sector under pressure. The steady contraction reflects broader macroeconomic challenges, including tight monetary policy, fiscal caution, and external uncertainties. While some stabilization is possible if inflation eases and supply chains improve, risks remain skewed to the downside.

Investors and policymakers should monitor inflation trends, ECB policy signals, and geopolitical developments closely. The manufacturing sector’s health will be a bellwether for France’s broader economic trajectory in 2026.