EU CREDIT SUPPLY: National Australia Bank (NAB) : IPT

Although the French flash December composite PMI was essentially in line with expectations at 50.1 (vs 50.2 cons, 50.4 prior), the details of the report appear somewhat weak. Ongoing political uncertainty contributed to a decline in overall private sector new business volumes and year-ahead growth expectations.  

This was most felt on the services side, with the services component weaker-than-expected at 50.2 (vs 51.1 cons, 51.4 prior). However, note that the services PMI remains above the contractionary levels seen through September 2024 – October 2025.

Meanwhile, manufacturing registered a 40-month high of 50.6 (vs 48.1 cons, 57.8 prior). However, the output index was only at a 4-month high of 49.7 (vs 45.0 prior). 

Key notes from the release:

• “At the sector level, December saw a further, albeit only fractional, increase in services output. Work undertaken on new and existing business reportedly drove growth, anecdotal evidence showed….Manufacturing production almost stabilised, marking a relative improvement when compared with November’s sharp and accelerated decline”
• “Overall private sector new business volumes fell during the final month of 2025. Panel members linked softer demand to uncertainty surrounding the government budget, with non-essential client spending reportedly being consequently postponed. Lower customer numbers and sluggish market conditions were also cited”
• “French businesses expanded employment at the end of the fourth quarter.”…” Manufacturing saw the more pronounced rise, as services employment ticked up only fractionally”
• “December’s renewed increase in hiring came in tandem with a softening of firms’ growth expectations”….” Political uncertainty was commonly noted as a factor that weighed on business sentiment. Companies also shared downbeat demand projections for 2026”
• “Prices charged were virtually unchanged once again as strong competition for work reportedly restricted company pricing power. This was despite a renewed increase in factory gate charges, which rose at the quickest pace in 16 months”.

Mar '26 Brent futures trade below $60.00, with BBG headlines noting that this is the lowest print for front month Brent since May (more volume and OI is in the March contract than February at this stage).

• Front month (continuation chart) year-to-date lows come in at $58.40.
• Our commodities team notes that oil is extending the recent bearish trend with oversupply still in focus and with the market marginally more positively on Ukraine-US talks while pricing in limited disruption to Russian exports.

• MNI: FRANCE DEC FLASH MANUF PMI 50.6 (48.1 FCAST, 47.8 NOV)
• FRANCE DEC FLASH SERV PMI 50.2 (51.1 FCAST, 51.4 NOV)