France's manufacturing sector closed the third quarter of 2025 on a weaker footing, as the manufacturing PMI slipped below the growth threshold to 48.2. This decline reflects a sharper contraction in both production and new orders, largely tied to fragile domestic demand, sluggish exports, and political uncertainty following the fall of the Bayrou government. The investment goods sub-sector bore the brunt of the downturn, reporting the weakest sales and production trends.

Firms responded by cutting purchasing volumes and reducing inventories, with finished goods stocks falling at their steepest pace in nearly five years. Despite softer demand for materials, supply chains remained strained, with delivery delays among the most severe in over two years. Interestingly, employment in the sector grew for the fifth consecutive month, though at a slower pace, suggesting companies are cautious but not yet moving to large-scale job cuts.

Pricing trends revealed squeezed margins as input costs continued to rise moderately, but competitive pressures forced producers to discount factory gate prices. With confidence slipping to an eight-month low and expectations barely positive, French manufacturing faces a challenging period ahead, balancing political headwinds, weaker global trade, and the need to sustain fragile optimism. This latest update takes the French RPI to 11 and the RPI-P to 22, meaning that economic activities are now ahead of the expectations of the French economy.

The consensus sees the final index unrevised from the flash at 48.1 and down from 50.4 in August.

The Manufacturing Purchasing Managers' Index (PMI) provides an estimate of manufacturing business activity for the preceding month by using information obtained from a representative sector survey incorporating around 400 companies. Results are synthesised into a single index which can range between zero and 100. A reading above (below) 50 signals rising (falling) activity versus the previous month and the closer to 100 (zero) the faster is activity growing (contracting). The data are released by S&P Global.

Investors need to keep their fingers on the pulse of the economy because it dictates how various types of investments will perform. By tracking economic data such as the ISM manufacturing index in the U.S. and the S&P Global PMIs elsewhere, investors will know what the economic backdrop is for the various markets. The stock market likes to see healthy economic growth because that translates to higher corporate profits. The bond market prefers less rapid growth and is extremely sensitive to whether the economy is growing too quickly and causing potential inflationary pressures..

The S&P Global PMI manufacturing data give a detailed look at the manufacturing sector, how busy it is and where things are headed. Since the manufacturing sector is a major source of cyclical variability in the economy, this report has a big influence on the markets. And its sub-indexes provide a picture of orders, output, employment and prices.