- Prior 46.0
- Composite PMI 44.1 vs 43.5 prelim
- Prior 46.0
Despite better revisions, softer demand conditions continue to weigh on France's services sector towards the end of Q3. The contraction reading is now on a four-month streak as business confidence also slumps to its weakest in nearly three years. HCOB notes that:
“The French services sector is in troubled waters. According to the HCOB PMI, business activity continued to fall for the fourth month in a row. For now, there is no sign of a trend reversal. In line with activity trends, new business at home and abroad continues to weaken, with some companies surveyed reporting lower demand in the real estate sector and other areas of the economy exposed to this industry.
“We might be in for a bumpy ride with jobs soon. Although hiring still goes strong, sooner or later there will most likely be a cooling of this hiring spree if the trend of declining activity continues.
“Inflation remains in hot territory. Input prices rose faster in September, with companies complaining about higher energy costs, rising wages and general inflation, and these factors continue to cause a loss of purchasing power. Accordingly, output prices continued to rise, although the pace of increase is much slower than that of costs. Nevertheless, it means companies have been able to pass on at least part of the input price increases to their customers.
“It's a bit of a toss-up as to where the French services sector goes from here. On the one hand, service companies continue to assess the future positively, although they are less optimistic than in the previous month and much less so than seen on average amid fears of an economic slowdown in France and a further deterioration in demand. However, expectations could recover in the coming months as our nowcast points to growth of 0.2% in the fourth quarter, with the services sector contributing positively.”
