France June final services PMI 49.6 vs 48.7 prelim | Forexlive
- Prior 48.9
- Composite PMI 49.2 vs 48.5 prelim
- Prior 49.3
The revision higher points to a marginal improvement in French services sector activity to wrap up Q2. And overall business activity comes in more or less in line with what was experienced in May. Activity and new orders decreased at weaker rates while business confidence jumped to
an eight-month high. However, employment conditions remain a bit of a concerning point. HCOB notes that:
“Overall activity in the French private sector economy remained broadly stable in June compared to the previous month.
However, a divergence between sectors is becoming more apparent: while the manufacturing sector failed to continue its
upward trend, the services sector showed a modest improvement, albeit remaining in contractionary territory for nearly a
year. Despite the absence of a clear upward trend, service sector activity has shown some little gains in recent months,
contributing to the Composite Output Index hovering just below the expansion threshold.
“Signs of stabilisation in the service sector are emerging, underpinned by tentative improvements in underlying demand
conditions. However, it seems too early to call this a real upturn. Notably, the decline in new business eased for the second
consecutive month, marking the slowest rate of contraction since the beginning of the year. Furthermore, new export orders
returned to growth following a prolonged period of decline.
“After a brief episode of output price deflation in May, June saw a renewed increase in prices, with survey respondents
indicating a partial pass-through of higher input costs to customers. Operating expenses continued to rise at a solid pace,
driven by a combination of wage pressures, elevated electricity prices, and increased transportation costs. The latter
potentially reflected temporary disruptions linked to the recent escalation of conflict in the Middle East. Nonetheless, overall
price increases remained moderate and below their long-term average.
“Business sentiment among French service providers improved markedly in June. Easing inflationary pressures and a less
restrictive monetary policy stance are expected to support household consumption and business investment over the coming
year. However, uncertainty surrounding potential tariff measures -pending a decision on July 8 – could weigh on sentiment in
the near term. In light of still-muted demand conditions, service sector firms are actively exploring opportunities to adjust
staffing levels downward.”
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