Contraction in France’s Services Sector: Declining Demand

According to a report published by S&P Global on Friday, France’s services sector contracted further in January due to weak demand and political instability, adding more pressure on economic activity.

Decline in Services PMI

The HCOB Flash Services PMI Business Activity Index, a key economic performance indicator, fell to 48.9 in January, down from 49.3 in December. This figure was also below analysts’ expectations of 49.3.

A PMI below 50.0 indicates economic contraction.

Moderate Improvement in France’s Private Sector

Despite the downturn in the services sector, France’s private sector as a whole showed signs of recovery:

• The Composite PMI, which measures combined activity in manufacturing and services, rose from 47.5 in December to 48.3 in January.
• This exceeded analysts’ expectations of 47.7.

Read more: Euro Area Inflation Rises to 2.4% in December 2024

Growth in Manufacturing

The Manufacturing Output Index, which tracks the performance of the manufacturing sector, also improved:

• It increased from 41.9 in December to 45.3 in January.
• This figure was above forecasts, which had predicted 42.3.

Conclusion

While France’s services sector remains under pressure due to weak demand and political uncertainty, manufacturing and overall economic activity have shown relative improvement. However, PMI figures below 50 still indicate an ongoing contraction in the French economy.

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