PARIS, Oct 1 Reuters France39;s manufacturing sector continued to contract in September, although the pace of decline eased somewhat from the previous month and was less steep than an initial flash estimate, a business survey showed on Tuesday.

The HCOB France Manufacturing Purchasing Managers39; Index PMI, compiled by SP Global, edged up to 44.6 in September from 43.9 in August, marking its highest reading since June.

However, the index remained well below the 50.0 threshold that separates growth from contraction, indicating ongoing deterioration in the sector.

The French industrial sector remains mired in a deep recession, said Dr Tariq Kamal Chaudhry, Economist at Hamburg Commercial Bank AG. He added Industrial companies are increasingly pessimistic about the future, perhaps unsettled by the ongoing political uncertainty in the country.

The survey highlighted persistent weak demand as the primary factor behind the decline in output.

Domestic and international demand remained very subdued, with notable drops in sales to North America and parts of Western Europe.

Manufacturers also faced challenges with input costs that continued to squeeze profit margins. Rising input costs cannot be entirely passed on to end customers due to stagnant demand, Chaudhry said.

Nearly 28 of surveyed companies anticipated a decrease in production over the next 12 months, compared with 24 expecting growth.

Reporting by Tassilo Hummel; Editing by Hugh Lawson

Source Reuters