Private sector activity in France experienced its “strongest drop” in more than two and a half years in July, after a sharp contraction in June, “signaling a continued deterioration in economic conditions,” according to the provisional PMI index published Monday by the S&P Global agency. The “Flash” composite index, which measures the activity of the private sector, stood at 46.6 in July, compared to 47.2 in June (final figure revised downward), the lowest since November 2020, in particular dragged down by “the manufacturing and (the) services sector”.
The observed decline reflects “a new drop in demand, which in turn translated into a further reduction in business in progress at companies,” explains S&P Global, recalling that “at the same time, job growth has stagnated.” According to a survey conducted by S&P Global among a representative panel of 750 companies, an index value above 50 is synonymous with expansion, while a value below this threshold is synonymous with contraction.
Strengthening business confidence for the coming year
The decline in the index is mainly due to “a simultaneous decline in activity in the manufacturing sector and in the services sector for the second consecutive month,” according to the study. Manufacturing production fell to 43.2 (from 43.7 in June), and “manufacturers often attribute lower production levels to weaker demand.” The manufacturing industry index fell sharply to 44.5 (from 46 in June), its lowest level in more than three years.
The decrease in service activity (47.4 in July compared to 48.0 in June) is attributed by the agents that responded to the study, in particular, to “the decrease in new business, some companies having mentioned the impact of the high level of prices on their new contracts”, the study completes.
The confidence shown by the companies regarding an increase in their activity in the next twelve months has been reinforced, especially among certain companies thanks to the “reinforcement of their workforce”. However, among these companies, “manufacturers continue to anticipate a decline in their activity” in this same period.
Source: BFM TV
