French business activity contracts in October amid political, financial pressures, PMI shows

French Business Activity Falls in October Amid Rising Political, Financial Pressures

French Business Activity and Economic Indicators in October

PARIS, Oct 23 (Reuters) - French business activity unexpectedly contracted in October, marking a quick reversal from September's growth, a survey by S&P Global showed on Friday.

Sharp Decline in Demand and Contributing Factors

This reflected the sharpest decline in demand for French goods and services since May, which surveyed businesses tied to heightened political uncertainty and economic pressures.

Political and Financial Pressures Intensify

French government borrowing costs have jumped in recent weeks on investor concerns about the country's ability to repair its finances, while waves of street protests have raised the political temperature ahead of a presidential election in the spring. 

Expert Commentary on Economic Conditions

• "September's rebound in economic activity proved to be short-lived, which is hardly surprising given the rapid tightening of financial conditions and a further increase in political pressure across France during October," said Joe Hayes, senior principal economist at S&P Global Market Intelligence.

PMI Data and Economic Outlook

• The S&P Global French flash services PMI for October fell to 48.4 points from 51.2 in September. A figure below 50 shows a contraction in activity, while above 50 shows expansion

• The services PMI figure was also below a Reuters poll forecast of 50.7 points.

• The flash manufacturing PMI for October fell to 49.3 points from 50.6 in September, also below a Reuters forecast for a reading of 50.5.

• The composite flash PMI, which comprises both the services and manufacturing surveys, fell to 48.4 points from 51.1 points, also below a Reuters poll forecast of 50.5 points.

Business Sentiment and Future Expectations

• "October figures could be a prelude of what's to come as the survey's sentiment indicator, which explicitly asks firms about their expectations for the next 12 months, sank to a six-and-a-half-year low. This reflects firms' concerns about what is shaping up to be a highly uncertain 2027 presidential election, compounding pre-existing worries about France's fiscal situation," Hayes said.

(Reporting by Dominique Vidalon; Editing by Toby Chopra)