• Prior 53.9
  • Manufacturing PMI 49.6 vs 50.8 expected
  • Prior 51.4
  • Composite PMI 50.6 vs 51.8 expected
  • Prior 52.5

The services sector declined for a third month in a row as French business activity slides further with the manufacturing sector now seen contracting. It is but a further indication that the economy is teetering towards a recession. Of note, the data also showed the first drop in new business activity since February 2021 as rising inflation weighed on consumer purchasing power. The euro has fallen on the headlines with a drop from 1.0205 to 1.0183 at the moment.

S&P Global notes that:

“July ‘flash’ PMI data raises further concerns that the French economy is heading towards a recession as data signalled worsening trends across a number of key indicators. The level of output was up only marginally from June and solely reflected activity growth at services firms. The manufacturing sector is already in a steep downturn, with production levels falling at the fastest rate since the initial phase of the COVID-19 pandemic in the first half of 2020. The growth trend in the service sector meanwhile worsened further, and momentum is clearly to the downside here.

“Demand is being adversely impacted by the intense inflationary environment, with clients reluctant to place orders at these elevated prices. Consequently, new business fell for the first time since February 2021. It’s difficult to imagine the near-term trend improving when anecdotal evidence from panellists continues to portray a picture of worsening health for demand. This is especially the case for the services economy, which is rapidly losing support from the post-pandemic recovery in consumer spending.”