French Services PMI Falls Sharply in August Amid Weak Demand and Inflation
August PMI Data Reveals Contraction in French Services Sector
PARIS, Sept 3 (Reuters) - France's services sector contracted more than expected in August, as weaker demand and extreme heat weighed on sales and inflationary pressure crept back up, a business survey showed on Thursday.
Key PMI Figures and Market Reaction
• The S&P Global France Final Services PMI for August declined to 48.0 points from 49.6 in July. A figure below 50 points shows a contraction in activity while above 50 shows an expansion.
• The final reading was slightly lower than the flash services figure of 48.4.
New Business and International Sales Trends
• New business fell after July's marginal gain, marking the eighth deterioration in the past nine months. Sales to international clients declined at the fastest pace since May.
Employment and Backlogs of Work
• Backlogs of work fell at the sharpest pace in four months, extending the current decline to 12 months. Employment also fell for a fourth straight month, though the pace of job shedding eased.
Inflationary Pressures and Cost Dynamics
Rising Prices and Input Costs
• Price pressures picked up in August. Charges rose at the fastest pace in three months, while input cost inflation increased for the first time since May, with fuel frequently cited as a source of pressure.
Composite PMI and Broader Economic Outlook
Composite PMI Performance
• The August final composite PMI — which includes both the services and the manufacturing sectors — declined to 48.5 points from 49.4 in July, also coming in slightly below a flash August composite PMI figure of 48.8.
Expert Commentary
Impact of Extreme Heat and Political Uncertainty
• "We should perhaps discount the August numbers somewhat, given the extreme heat seen this summer," said Joe Hayes, senior economist at S&P Global Market Intelligence.
• "Nevertheless, the outlook remains a challenged one for France. With the 2027 election period looming, companies remain cautious towards the year-ahead, with confidence well below its long-term average," he said.
(Reporting by Dominique Vidalon; Editing by Hugh Lawson)
