France’s private sector contracted the most in four months in June on renewed decrease in new orders, flash survey results from S&P Global showed Friday.
The headline HCOB flash composite output index fell unexpectedly to 48.2 in June from 48.9 in May. The score was seen at 49.5.
The score signaled a moderate but accelerated contraction in private sector activity.
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Sharper rates of decline were seen in both manufacturing and services in June, though the contraction was more pronounced at goods producers.
The flash services Purchasing Managers’ Index posted 48.8, down from 49.3 in the prior month. The reading was expected to rise to 50.0.
The manufacturing PMI slid to 45.3 from 46.4 in April. The expected reading was 46.8.
Fewer client numbers as well as a fall in the level of incoming new business weighed on activity. The fall in incoming new business was the biggest since January.
With intakes of new work falling, companies channeled more resources towards clearing backlogs. The rate of depletion in outstanding business was the fastest in five months.
Employment continued to increase in June despite deteriorating demand environment. However, the rate of job creation was the weakest since March.
Business confidence fell to its lowest since the start of the year as companies expressed uncertainty towards the upcoming election result and broad geopolitical risks.
Further, the survey showed that input price inflation at the composite level was unchanged from May’s 38-month low.
Prices charged for goods and services increased at a markedly softer pace in June with the rate slowing to its weakest since February 2021.
HCOB Economist Norman Liebke said the French economy likely grew 0.1 percent in the second quarter.
“For the third and fourth quarter, we expect a GDP boost from the Olympics taking place in July and August in France,” Liebke added.
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