PARIS (Reuters) – The service sector, dominating in France, contracted more than initially estimated in September, with a drop in activity at its fastest rate since April, while political uncertainty and the weakness of demand weighed on new orders, according to a survey published on Friday.
The final PMI HCOB of services index, compiled by S&P Global, fell to 48.5 in September, against 49.8 in August, and against a preliminary estimate of 48.9, thus passing under the 50.0 threshold which separates the growth of the contraction.
The index remained below this threshold for 13 months.
The drop in commercial activity was allocated to delays in the decision -making of customers and with difficult conditions of sale, new orders also contracting for the thirteenth consecutive months.
“French politics currently provides little support for businesses, because the current political impasse adds to uncertainty and confidence,” said Jonas Feldhusen, junior economist at the Hamburg Commercial Bank.
The new Prime Minister Sébastien Lecornu, appointed on September 9, endeavors to form a government in the coming days, but his task is arduous: he does not have a clear majority in Parliament and must face demonstrations against the budget cuts that are looming.
Despite the slowdown, employment in the service sector increased for the second consecutive month, although a slower rate than in August. Companies have continued to hire, in particular in sales services, as they anticipate stronger demand in the future.
The survey also indicates a drop in prices charged by service companies for the first time since May, with the effect of competitive pressures, although the reduction is marginal. The costs of inputs have increased, but inflation has remained lower than historical levels.
The composite PMI index, which includes both manufacturing industry and services, fell to 48.1 in September, against 49.8 in August, marking the fastest decline in private sector activity since April.
(Benoit Van Overstraeten, Mara Vîlcu for the , edited by Augustin Turpin)
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