Paris – France
The latest data from S&P Global’s HCOB Flash PMI for France shows a sharp contraction in economic activity in September. The composite PMI fell to 48.4 from 49.8 in August. Readings below 50 indicate contraction.
• Breakdown:
• Manufacturing PMI dropped to 48.1 from 50.4, with output falling heavily to about 45.9, a seven-month low.
• Services sector also declined, with its PMI at about 48.9, down from August.
• New orders have now declined for sixteen consecutive months, showing ongoing weak demand.
• Impacts & Indicators:
• Despite the contraction, employment in the private sector ticked up slightly for the second month.
• Firms began reducing prices for the first time since May, even though operating costs are only mildly rising—this reflects weak demand and intense competition.
• Confidence among businesses remains low, due in part to political uncertainty.
• Why it matters: France is the second-largest economy in the Euro-zone. Its contraction drags on the broader economic outlook for Europe. It also raises questions about how policymakers will respond in terms of fiscal stimuli, interest rates, or structural reforms. It suggests consumers and businesses are cautious, and that demand remains soft.
