- Prior 49.6
- Composite PMI 48.6 vs 49.6 prelim
- Prior 49.2
That is a disappointing revision as French services activity slumps in July, with demand conditions deteriorating further. Besides that, low client business activity and inadequate staffing capacity weighed on
output volumes as well. HCOB notes that:
“France’s Composite PMI has declined to a three-month low, marking a subdued start to the second half of the year.
Although GDP growth came in stronger than expected at 0.3% quarter-on-quarter, this expansion was largely driven by
changes in inventories. This raises concerns about the sustainability of the current growth path. The muted private sector
sentiment suggests limited momentum in the near term.
“Activity in the French service sector had approached the expansion threshold in recent months, but the HCOB Services PMI
registered a moderate decline in July. This reflects persistently weak demand conditions. Notably, some survey respondents
pointed to delayed decision-making as a factor weighing on demand. These delays likely stem from political uncertainty
within France and ongoing geopolitical tensions in global trade. As a result, business expectations for the next 12 months
have deteriorated.
“The slowdown in business activity is increasingly reflected in capacity utilization. In July, backlogs of work declined, and
forward-looking expectations worsened significantly. This is translating into a more challenging environment for workers in
the services sector: temporary contracts are less frequently renewed, and voluntary departures are often not followed by
new hires, leading to a net reduction in employment.
“On the price side, conditions remain broadly unchanged from the previous month. Input prices continue to rise moderately,
driven by higher wages and increased costs for intermediate goods. Given firms’ limited pricing power, output price inflation
remains contained
