Private sector growth at its lowest for 17 months in France

Private sector activity in France recorded its weakest growth in 17 months in August, according to an indicator published on Monday by S&P Global. The composite index of overall activity, which measures private sector activity, settled definitively at 50.4 last month, against 51.7 a month earlier, said the financial information agency.

At the end of August, S&P Global expected a contraction in private sector activity, with a composite PMI index at 49.8. An index below 50 indicates a contraction in activity while an index above this limit reflects an expansion.

The weak growth observed in August “was exclusively based on that of the service sector”, indicates S&P Global. And this expansion of the service sector has slowed compared to July, the agency said. Manufacturing production fell for the third month in a row.

A risk of stagnation

“The activity of the French services sector is gradually approaching stagnation,” analyzes Andrew Harker, economist at S&P Global Market Intelligence. According to him “the forward-looking indicators of the survey raise fears of further deterioration in the economy in the coming months”.

“Combined with a further deterioration in the economic situation in the manufacturing sector, the weakening performance of the services sector foreshadows a stagnation of the French economy in the third quarter of 2022 “, he believes. The agency also notes the “first contraction in the volume of new business for a year and a half in the French private sector”.

On a more positive note: employment continued to grow “at a steady pace”. In addition, the outlook for activity “remained favorable, despite a decline in confidence to a 21-month low”.

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