France January final services PMI 49.4 vs 49.2 prelim | Forexlive

• Composite PMI 49.1 vs 49.0 prelim

Little change to the initial estimates as the final report reaffirms a marginal decline in French services and overall business activity to start the new year. S&P Global notes that:

“While it’s clear from the PMI surveys that France’s
economy has been contracting since last November,
declines thus far have only been marginal. This is a much
better outcome than many had anticipated prior to the
winter, when concerns about the economic impact of the
energy crisis were at their most elevated.

“Furthermore, shallow declines in business activity in
each of the past three months also limit the likelihood
of the country even dipping into recession. While this
can’t be ruled out just yet, other areas of the PMI survey
show reasons to be cautiously optimistic. We saw the
Composite Future Output Index hit a six-month high in
January, while employment growth also improved.

“That said, of concern will be the still-elevated rate at
which input costs are rising, with many firms commenting
on growing wage pressures. We’re seeing inflation stay
much stickier in the service sector, with firms here
not hesitating to raise their prices more aggressively.
Whether this aggravates the current soft patch in
demand remains to be seen, but it poses a significant
challenge to monetary policymakers in assessing how
far they need to go in the tightening cycle.”