FRANCE DATA: June Flash PMI: Bleak Details, But 12m Ahead Confidence Rises

Both the flash French manufacturing and services PMIs were weaker than expected in June, with manufacturing index falling two points to 47.8 (vs 49.8 cons) - the lowest since February - and services printing at 48.7 (vs 49.1 cons, 48.9 prior). A reminder that the INSEE June manufacturing survey (released last week) was quite soft, so the weaker-than-expected PMI print isn't too much of a surprise. The details of the flash report are bleak, though 12-month ahead confidence surprisingly rose to the highest since October.

Bund futures knee-jerked to a high of 130.77 post-data, but have since eased back to 130.68, still 25 ticks below Friday's settlement levels.

Key notes from the release:

• "According to survey participants output was negatively impacted by adverse demand trends, excess stocks among clients, challenging market conditions and order postponements".
• "Overall sales decreased for the thirteenth successive month in June"..."The accelerated downturn stemmed from the quickest decline in factory orders since February as goods producers reportedly grappled with intense international competition, slow decision making among clients and automotive sector weakness"
• "New export orders placed with private sector firms in France continued to decrease at the end of the second quarter. The drop was led by manufacturers who noted a solid and quicker rate of contraction"
• "PMI price gauges highlighted subdued inflationary pressures across the French private sector economy"..."There was a slower increase in the service sector and an acceleration in the manufacturing industry, but the former nevertheless recorded the sharper rate of inflation. Survey participants reported greater outlays on energy, metals, salaries and transportation."
• "Trends for selling prices were mixed in June, as discounting among goods producers contrasted with a renewed increase in prices charged for the provision of French services."
• "The combination of falling new orders and reduced backlogs urged French companies to trim headcounts in June"..."Services firms recorded a faster decline in employment than their manufacturing counterparts."
• "June data revealed a rise in business sentiment across France, with firms at their most optimistic since last October. Expectations that output would expand over the course of the coming 12 months were pinned on hopes of an improvement in demand conditions"