French Private Sector Slips Into Contraction

(RTTNews) - France's private sector economy slipped back into contraction in September as the temporary Olympic boost faded, flash survey data from S&P Global showed on Monday.

The HCOB composite output index posted 47.4 in September, down from a 27-month high of 53.1 in August.

The index fell below the critical 50.0 mark, indicating a renewed contraction in the private sector. Moreover, business activity fell at the fastest pace since January. Manufacturing output declined the most since January, while fresh decrease was primarily driven by the more sizeable services sector, which slipped back into contraction after robust growth in August.

Survey respondents cited a drop-off in customer numbers after the Olympic Games. Total new orders fell at the fastest pace since June. Private sector new export business extended its current sequence of decline to just over two-and-a-half years in September.

Due to weak demand, backlogs of work slipped deeper into contraction territory. The sharp fall in pending workloads was the driven by the services economy.

Nonetheless, business confidence strengthened as growth expectations were their most optimistic for four months. Negative sentiment across manufacturing contrasted with a considerable uplift in positivity among services firms.

Greater optimism supported hiring activity. Employment edged slightly higher as job creation was confined to the service sector.

The survey showed a considerable easing of cost pressures across the country. Input price inflation eased to a 46-month low. With margins under less strain, firms offered discounts for the first time since February 2021.

"It is a sad reality; the strong growth in the French economy seen in August evaporated by September," Hamburg Commercial Bank Economist Tariq Kamal Chaudhry said.

"Our HCOB Nowcast predicts near stagnation in the French economy for the third quarter, compared to the previous one," said Chaudhry. "With this, France joins the group of Eurozone economies struggling with significant growth challenges," he added.