For the fourth consecutive month, private sector activity continued to decline in December in France. This therefore led to a drop in employment, in the private sector, but also in the services sector – a first in four years.
Private sector activity continued to decline in December in France for the fourth consecutive month, leading to a drop in employment, but it recovered from the ten-month low recorded in November, according to the index PMI published Monday by the S&P Global agency and the Hamburg Commercial Bank (HCOB).
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The most marked drop in numbers since October 2020
The composite index, produced from the responses of a panel of 400 companies surveyed from December 5 to 18, stood at 47.5 in December, compared to 45.9 in November, improving but still in the negative zone: an index below 50 signals a contraction in activity.
As in almost all of 2024, the overall volume of new business declined in December compared to the previous month, but the pace of decline was the slowest since last September. Among the main factors for the decline is the decline in demand on foreign markets.
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After a slight increase in November, employment fell in the private sector. This drop in numbers, although moderate, was the most marked since October 2020 and concerned both industry and services. Price tensions remained moderate.
First decline in employment in four years in the services sector
In the services sector alone, employment fell for the first time in four years. Employment in the sector fell in December for the first time in four years, even if the rate of job cuts remained modest. Some companies reported layoffs but most mentioned the non-replacement of voluntary departures or the non-renewal of fixed-term contracts.
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Companies cite as explanatory factors the drop in customer demand, political uncertainty, the tightening of borrowing conditions, as well as the weak economy in the construction and real estate sectors.
The trend is similar across the eurozone, where private sector activity contracted in December for the second consecutive month, but at a slower pace than in November, according to the Flash PMI published mid -December by S&P Global.
