French business activity contracts further in August as demand conditions remain subdued
- August flash services PMI 48.4 vs 49.8 expected
- Prior 49.6
- August flash manufacturing PMI 51.5 vs 50.0 expected
- Prior 49.8
- August flash composite PMI 48.8 vs 49.5 expected
- Prior 49.4
The French private sector economy remains weak in August, with another contraction seen in overall business activity. This once again continues to reaffirm that the French economy remains on track for yet another subdued and mediocre quarterly showing as demand conditions remain soft.
The services sector was the main drag, offsetting the better showing in the manufacturing sector in August – which saw production rise for the first time since April. Of note, extreme heat was cited as a reason for
lower activity levels. That sees demand conditions fall off further as new orders
decreased modestly, extending the current period of falling
sales volumes to nine months.
Meanwhile, input price inflation did at least slow to a five-month low. That indicates receding cost pressures, although the rate of
increase in output charges was broadly unchanged. And even on the drop, the rate of input price inflation
remained above that seen just before the period before the Middle East conflict.
S&P Global notes that:
“While the weather certainly heated up across Europe
this summer, France’s economy is barely lukewarm.
The flash PMI report revealed another month of frail
economic conditions, with some firms, mainly in the
service sector, highlighting the extreme heat as a
reason for lower activity and demand. There was some
renewed vigour in the manufacturing sector, however,
as production rose for the first time since April’s
stockpile-driven boost, potentially indicating some
more stability for factories as inflation in the goodsproducing sector remains on a downward trajectory.
That said, inflation in the service sector ticked up
for the first time since May as renewed pressures on
global oil prices translated into higher fuel costs. Firms’
decisiveness when passing on higher expenses could
have implications for the inflation outlook."
This article was written by Justin Low at investinglive.com.