France August flash services PMI 51.0 vs 53.0 expected

• Prior 53.2
• Manufacturing PMI 49.0 vs 49.0 expected
• Prior 49.5
• Composite PMI 49.8 vs 50.8 expected
• Prior 51.7

With the sharp drop in services activity, the French economy is seen contracting in August for the first time in over a year-and-a-half. For some context, the services print is a 16-month low, manufacturing print a 27-month low, and composite print a 18-month low. The major drag on ouput was a deterioration in demand conditions, which is likely to deepen further in the months ahead. S&P Global notes that:

“August flash PMI data for France suggest the economy has now entered into contraction for the first time in a year-and-a-half as a sharp manufacturing downturn more than offset only a marginal increase in service sector activity. High inflation and a waning post-COVID boost to demand has led businesses and consumers to cut back on discretionary spending, causing demand for services to fall for the first time since March 2021. This was accompanied by another steep decline in manufacturing order books as businesses in both sectors commented on weakening underlying demand conditions and growing client hesitancy.

“European economies look set for a challenging run into year-end and France is no exception. High inflation has squeezed purchasing power among consumers and businesses alike, although we saw further signs to suggest we have passed peak price pressures. Nevertheless, inflation Inflation Inflation is defined as a quantitative measure of the rate in which the average price level of goods and services in an economy or country increases over a period of time. It is the rise in the general level of prices where a given currency effectively buys less than it did in prior periods.In terms of assessing the strength or currencies, and by extension foreign exchange, inflation or measures of it are extremely influential. Inflation stems from the overall creation of money. This money is m Inflation is defined as a quantitative measure of the rate in which the average price level of goods and services in an economy or country increases over a period of time. It is the rise in the general level of prices where a given currency effectively buys less than it did in prior periods.In terms of assessing the strength or currencies, and by extension foreign exchange, inflation or measures of it are extremely influential. Inflation stems from the overall creation of money. This money is m Read this Term remains elevated and businesses reported more and more clients being deterred from placing orders due to the current price level. The downward trend in the France PMI may well persist now demand for goods and services is falling.”