French Private Sector Downturn Deepens

(RTTNews) - France's private sector registered a deeper contraction in February as the drag from the service sector intensified, survey results from S&P Global revealed Friday.

The HCOB flash composite output index dropped unexpectedly to 44.5 in February from 47.6 in January. The score signaled the steepest fall since September 2023. The reading was seen at 48.0.

There were marked contractions in output across both manufacturing and services but the latest fall in composite activity entirely reflects the worsening performance of the services sector.

The services Purchasing Managers' Index slid to a 17-month low of 44.5 from 48.2 in January, while it was forecast to climb to 48.8.

Meanwhile, the manufacturing PMI hit a nine-month high of 45.5 in February, up from 45.0 in January. The reading was expected to rise moderately to 45.3.

Both sectors reported lower client demand in February. Lower footfall, weak confidence in the outlook and investment reticence also dampened sales. February's more rapid decrease in new business placed a greater onus on existing work to support activity. Backlogged orders decreased the most in 15 months and companies reduced their employment levels at the steepest pace since August 2020.

On the price front, the survey showed that input prices grew at the strongest pace since last August. Prices charged for goods and services rose only fractionally.

The survey showed that companies were broadly neutral as expectations of lower manufacturing production were accompanied by a subdued level of optimism across services.

Hamburg Commercial Bank Economist Tariq Kamal Chaudhry said, "Recession with no end in sight." "This fresh setback for the French economy perhaps comes as a surprise, given the recent allaying of some political uncertainty in the country," said Chaudhry.