France remains drag on overall Euro zone manufacturing

France , second largest economy in Euro Zone and is consistently lagging its larger partner Germany in economic activity.

European Central Bank's record easing program has reduced overall financing cost and pushed Euro down making Euro zone products competitive in global markets.

In spite of these benefits French manufacturing still remains drag on overall Euro zone economic activity as policymakers haven't just pursued policies, which would benefit its ailing manufacturing sector.

Key highlights from August manufacturing PMI -

• Business conditions in the French manufacturing sector deteriorated again in August. The headline PMI came at 48.3, down from 49.6 in July, lowest in four months.
  
  
• Production remained drag, thanks to reduction in new orders, which is now in decline for sixteen consecutive months.

• Latest data pointing to reduction in recruitment further in the sector.

France is experiencing high level of unemployment close to 10% unlike its Larger partner Germany. So while weaker Euro benefitted manufacturing with rising export orders, it is providing no help to domestic demand.

This makes France in vulnerable position with French Finance Minister Michael Sapin waiting for growth to improve debt to GDP and deficit ratios rather than pursuing reforms.