- Prior 48.4
- Manufacturing PMI 49.9 vs 51.0 expected
- Prior 51.2
- Composite PMI 49.9 vs 49.7 expected
- Prior 49.1
The French services sector bounced back to a two-month high, helping to shore up overall business activity in February. That as the manufacturing sector slips back into contraction, but just at the margin. Of note, new business inflows fell once again for a third straight month and at its quickest pace since July last year. That points to struggling demand conditions still plaguing the French economy in general. HCOB notes that:
“The French private sector is still struggling to gain real momentum. Since last November, the HCOB Composite PMI has
been hovering around the 50.0‑point growth threshold, implying that any real progress remains absent. A prime example is
hiring activity, which stagnated in February. The main drag continues to come from the demand side as new orders declined
yet again, with the situation looking even worse for export orders.
“At the sector level, developments diverged at the start of the year as manufacturing gained some ground while services
contracted. February was no different, as factory production growth contrasted with falling services output.
“Business expectations for the year ahead weakened somewhat, yet we remain cautiously optimistic given that the index
measuring corporate confidence is still higher than the 2025 average. Politically, agreement on the 2026 budget has brought
some calm, but Macron’s succession is already casting its shadow. Despite the presidential election not being due until
2027, reports suggest Christine Lagarde’s possible early departure as head of the ECB is partly motivated by a desire to
allow Macron to choose her successor.
“Price dynamics continue to move in different directions across sectors. Service providers granted price reductions to their
customers, whereas prices for manufactured goods picked up again after having fallen in the previous month. Corporate
cost pressures increased only moderately, and inflation remains clearly below the survey’s long‑term average.”
This article was written by Justin Low at investinglive.com.