PARIS (Reuters) – France’s services sector grew at its fastest pace in more than two years in August, boosted by the Olympics and rising domestic demand, final results of the monthly PMI survey from S&P Global and HCOB showed on Wednesday.

The index stood at 55.0 in August, its strongest increase in more than three years and the highest level since May 2022. It had come out at 50.1 in July, while the first estimate was given at 55.0 for the month of August.

The 50 mark separates growth and contraction in activity.

Norman Liebke, an economist at Hamburg Commercial Bank, attributed the acceleration to the Paris Olympics.

“This level is not sustainable,” he said. “This one-off increase is not visible in other PMI sub-indices, as only business activity and new orders have registered a significant improvement,” he added.

Despite the overall growth, the pace of job creation in the sector slowed for the fourth consecutive month, with the employment sub-index falling back towards the neutral threshold.

Input cost inflation eased to a 39-month low, but service providers raised prices more aggressively, with output price inflation accelerating from July.

“Wages remain the main source of cost inflation,” noted Norman Liebke.

New orders rebounded partly in August after a decline in June and July. The increase was mainly driven by domestic demand, with new orders from abroad falling for the sixth consecutive month.

Business confidence remained weak as political uncertainty dampened optimism. The backlog of work declined at its fastest pace since January, indicating less pressure on business capacity.

The composite PMI index, which includes both the services and industry sectors, rose from 49.1 in July to 53.1 in August, driven exclusively by the good performance of services.

(Written by Tassilo Hummel; Claude Chendjou, edited by Kate Entringer)

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