French Private Sector Downturn Worsens

(RTTNews) - France's private sector activity came under renewed pressure in April due to pronounced demand weakness in the domestic market and deteriorating confidence among service providers, flash survey data from S&P Global showed on Wednesday.

The HCOB composite output index registered 47.3 in April, down from 48.0 in March. The reading was expected to ease to 47.8.

The score remained below the threshold 50.0 mark for the eight successive month indicating contraction in output.

The contraction was driven entirely by the service sector as manufacturing output increased for the first time since May 2022.

The services Purchasing Managers' Index slid to 46.8 in April from 47.9 in the previous month. The score was also below forecast of 47.7.

The factory PMI posted 48.2, down from 48.5 a month ago. The reading was expected to drop more sharply to 47.9.

Service providers linked lower output to falling new business intakes. At composite level, new order intakes showed a steep and accelerated drop in demand.

While total new orders shrank at a faster pace, new export sales registered its shallowest fall since August 2022.

Declining workloads continued to drive backlog completion in April. Nonetheless, the decrease in outstanding orders was the softest in three months.

Companies displayed a preference for lower staffing capacity. Resignations and the non-renewal of fixed-term contracts were given as reasons for reduced employment.

French companies were pessimistic about the outlook and they were most downbeat in nearly five years. The dip in sentiment was solely due to a worsened outlook among service providers.

On the price front, the survey showed that input prices grew at the slowest pace in the year-to-date period. At the same time, prices charged were discounted for the first time in three months.

The PMI figures were eagerly awaited since the upheaval caused by "Liberation Day", Hamburg Commercial Bank junior economist Jonas Feldhusen said.

Despite the fall, the data are not as dire as anticipated, given the prevailing uncertainty and friction in global trade due to the ongoing tariff disputes, the economist noted.

"Nonetheless, it is increasingly evident that the French private sector will face substantial pressure in the coming months," added Feldhusen.