A French flag above the Élysée
Activity in the private services sector in France fell once again in January, to a level below expectations, shows the preliminary PMI S&P Global and HCOB survey, published on Friday.
The index for the services sector rose from 49.3 in December to 48.9 in January, compared to a consensus of 49.3. It is still below the threshold of 50.0 which separates growth and contraction in activity.
The French private sector as a whole saw a slight improvement, with the composite production PMI rising from 47.5 to 48.3, beating forecasts of 47.7, while the manufacturing activity index was rose from 41.9 to 45.3, beating the forecast of 42.3.
“The French economy is disappointing at the start of 2025… It is above all the political crisis which is economically paralyzing the country,” said Tariq Kamal Chaudhry, economist at Hamburg Commercial Bank.
“The next budget vote will decide not only the fate of the Bayrou government, but also the economic stability of the country,” he added.
-Business confidence fell in January, with businesses rating the outlook for the next 12 months as broadly neutral, compared with slightly optimistic the previous month.
The companies surveyed also recorded the fastest pace of job cuts since October 2020.
In France, INSEE reported on Thursday a drop in French business confidence in January.
France is expected to see weak but steady economic growth in the first half of 2025, as the political drama around the 2025 budget weighs on consumers and businesses, INSEE said last month.
(Written by Dominique Vidalon; French version Bertrand De Meyer, edited by Blandine Hénault)
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