France’s services sector contracted for a second consecutive month in August, with the S&P Global Purchasing Managers’ Index (PMI) falling to 48.0 from 49.6 in July, according to data released on September 3. The reading remains below the 50.0 threshold that separates growth from contraction.
New business declined for the eighth time in nine months, reversing a marginal improvement in July. Several firms attributed the drop to extreme heat during the month, though the overall reduction in new orders was described as moderate. International sales fell at the fastest pace since May, signaling weaker external demand.
Business volumes pending continued to shrink, with backlogs declining at the steepest rate in four months. This marked the 12th consecutive month of falling pending work, reflecting sustained pressure on operational capacity.
French service providers reduced staffing levels for the fourth straight month, though the pace of job cuts eased slightly from July. Companies largely avoided replacing departing workers, with some opting to trim permanent headcount instead.
Input costs rose sharply in August, driven primarily by higher fuel prices. The rate of inflation accelerated for the first time since May, prompting service firms to increase their own prices at the fastest pace in three months.
Business confidence improved marginally but remained well below historical averages. Firms cited political uncertainty, weakening customer demand, and challenging global economic conditions as key drags on sentiment.
The broader private sector also contracted, with the composite PMI output index declining to 48.5 from 49.4. The decline was entirely driven by the services sector, as manufacturing output recorded a marginal increase.
