PARIS (Reuters) – The French services sector was only very slightly contracted in August, the global activity of companies being close to stabilization, according to a survey of S&P Global published on Wednesday.
The PMI HCOB index of services, which measures the evolution of commercial activity compared to the previous month, increased to 49.8 in August, against 48.5 in July.
It is maintained just below the 50.0 threshold which separates the growth in the contraction of the activity.
Employment in the sector has progressed to the fastest rate for 15 months, after eight consecutive months of work reduction. The increase in hires is allocated both to permanent and temporary recruitments.
The HCOB France PMI Composite index, which covers the manufacturing services and industry, also increased to 49.8 in August, against 48.6 in July.
“Improvements come from both the services and the manufacturing industry, with a slowdown in drop rates in the two sectors,” said Jonas Feldhusen, economist at the Bank Commercial Hamburg.
“These developments are encouraging, although they must be considered with caution given the general climate of uncertainty and economic weakness in France, which is now confronted with the prospect of a new government crisis,” he added.
New affairs in the service sector have continued to decrease, although a slowest rate since January, with a sharp drop in foreign orders. However, the volume of pending cases has increased for the first time since April 2024, reflecting staff shortages and delays on the side of customers.
The costs of inputs and production prices have continued to increase slightly, the inflationary pressures intensifying to reach their highest level for six months. Despite this, competition has limited significant increases in production costs.
France’s economic prospects remain fragile in the context of the current political crisis, after Prime Minister François Bayrou has engaged responsibility for his government on the question of the fight against the country’s debt.
(Written by Makini Brice; Diana Mandia, edited by Blandine Hénault)
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