French services sector contracts again in March, PMI shows

PARIS (Reuters) - France's dominant services sector contracted for the seventh consecutive month in March, marking its weakest quarterly performance since the fourth quarter of 2023, S&P Global reported on Thursday.

The HCOB France services PMI rose to 47.9 in March from 45.3 in February, indicating a slowdown in the contraction rate. Readings above 50.0 point to growth.

March's flash services PMI stood at of 46.6 points.

Demand continued to deteriorate, with new business declining for the seventh month in a row. The volume of work in progress fell, prompting firms to reduce staff levels, although the rate of job cuts eased compared to February.

"The first quarter of 2025 ends on a disappointing note for the French services sector," said Dr. Tariq Kamal Chaudhry, economist at Hamburg Commercial Bank AG.

"Despite a slight slowdown in contraction compared to February, economic uncertainty and deteriorating demand weighed heavily on activity levels."

The composite PMI, which includes both manufacturing and services, rose to 48.0 in March from 45.1 in February, indicating a moderate contraction in private sector activity. The final figure was also up from the initial 'flash' reading of 47.0.

Inflationary pressures eased, with input costs showing the smallest increase since October last year, driven mainly by wage costs.

Looking ahead the outlook remains bleak, with both domestic and foreign demand seen continuing to decline. The 12-month activity outlook index held above 50.0 but was well below its long-term average, reflecting weak optimism among service providers.

Some firms expressed hope for lower interest rates and increased client portfolios, but many were concerned about growing uncertainty.

(Reporting by Benoit Van Overstraeten; Editing by Hugh Lawson)