France January final services PMI 48.2 vs 48.9 prelim

• Final Services PMI 48.2 vs. 48.9 expected and 49.3 prior.
• Final Composite PMI 47.6 vs. 48.3 expected and 47.5 prior.

Key findings:

• Activity levels fall at slightly faster rate as demand weakness persists
• Prices charged lowered for first time since April 2021
• Employment falls as business confidence sinks to 56-month low

Comment:

Commenting on the PMI data, Dr Tariq Kamal Chaudhry, Economist at Hamburg at Hamburg Commercial Bank, said:

“France’s service sector downturn continued in January. The HCOB PMI for services suggested that 2025 will be a
challenging year. Political uncertainty dampened activity, according to some panel members, while others attributed the
slowdown to weaker customer demand and reduced confidence in the economic outlook. Given the political situation, it is
understandable that companies are feeling uncertain. France’s Prime Minister François Bayrou is fighting for his political
survival while striving to pass a 2025 budget that meets the fiscal sustainability expectations of the EU Commission and
financial markets.

“The ECB is unlikely to be reassured by price developments. France, as one of the key economies in the Eurozone, is
exacerbating the ECB’s concerns about a resurgence of services inflation with its input prices. It is not so much the index
value, which is below the historical average, but rather the fact that cost inflation is accelerating despite weak demand.
Surveyed companies cited wage pressures, higher supplier prices, and increased fuel and energy costs. The issue for firms
is the weakness in demand for services, which led to falling prices for end customers in January.

“The outlook remains extremely cautious. French service companies are reporting shrinking orders from both domestic and
international markets. While international order intakes have jumped significantly towards stabilisation, future activity
expectations have fallen sharply. It is therefore unsurprising that service providers made more layoffs. The only consolation
is that those leaving did so voluntarily or due to their contracts expiring, according to survey respondents. The French
government will need to act swiftly to create political stability and prevent deeper disruptions in the labour market.”

This article was written by Giuseppe Dellamotta at www.forexlive.com.