Last month, the private sector experienced its first phase of growth since April, according to S&P Global and Hamburg Commercial Bank.
The boost from the Olympics was felt last month. French private sector activity picked up again in France in August, driven entirely by services, which saw a boost “short-lived” thanks to the Olympic Games, S&P Global and Hamburg Commercial Bank (HCOB) said on Wednesday.
The composite PMI index rose to 53.1 in August, up from 49.1 in July, signaling growth in overall activity for the first time since April. It was also a 27-month high. The composite index is a weighted average of the manufacturing and services indexes. Below 50, it indicates contraction in activity; above this threshold, it indicates expansion. The increase in August was driven exclusively by the services sector (55.0 compared to 50.1 in July), with the approximately 400 companies surveyed reporting an increase in new business and the number of customers.
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A fleeting rebound
“The PMI index of activity in the services sector in France gained almost five points compared to July to reach its highest level since May 2022. However, we do not expect the index to remain at such a level and believe that this short-lived rebound is linked to the Olympic Games.”commented Norman Liebke, economist at HCOB, quoted in the press release. “Job growth has slowed, while the decline in pending cases has accelerated.”he added.
Additionally, according to S&P Global and HCBO, “The recovery in demand was (…) limited to domestic markets, with export sales falling for a sixth consecutive month in August”albeit more slowly. Service providers also raised their prices in August, while their costs registered their smallest increase in 39 months. Published Monday, the PMI index of manufacturing production in August saw its biggest decline since January, falling from 44 in July to 43.9, “in a climate of political uncertainty in France and abroad”.
