PARIS (Reuters) -France’s dominant services sector contracted in October at its fastest pace since April, albeit less rapidly than first estimated, as political uncertainty weighed on demand in the euro zone’s second-biggest economy, a survey showed on Wednesday.
The HCOB France final purchasing managers index (PMI) for the services sector, compiled by S&P Global, stood at 48.0 versus 48.5 in September and below the 50 points threshold separating growth from contraction for the 14th month running. October’s flash services PMI was at 47.1 points.
The final composite PMI figure for last month, which comprises both the services and manufacturing sectors, was also several notches higher than first thought, at 47.7 points – down from 48.1 points in September but up from 46.8 points initially estimated. That is its sharpest rate of decline in eight months.
“The downward trend in France’s private sector economy continues unabated at the start of the fourth quarter,” said Hamburg Commercial Bank economist Jonas Feldhusen. He highlighted that weak demand and political uncertainty were key factors behind the decline.
Despite the downturn, employment in the services sector showed resilience, with workforce numbers rising for the third consecutive month. However, declining backlogs of work suggest that the current hiring trend may not be sustainable if demand remains weak.
Input costs for service providers rose at their slowest pace since February 2021, while prices charged by firms saw a marginal increase after a slight fall in September.
Overall, business sentiment remained subdued, with firms expressing concerns about the domestic political situation impacting future activity levels.
France’s economy grew faster than expected in the third quarter as exports surged, due mainly to shipments from the aerospace industry, and as corporate investment perked up despite a political crisis, official data published end October showed.
(Reporting by Benoit Van Overstraeten; Editing by Hugh Lawson)
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