French Private Sector Activity Levels Off

The HCOB France Composite PMI for January 2026 was revised higher to 49.1 from a flash estimate of 48.6, but remained below December’s 50.0. The latest reading pointed to renewed weakness in private sector activity, with the downturn driven mainly by the services sector, where the Business Activity Index slipped from 50.1 in December to 48.4 in January, marking the first contraction since October. Manufacturing showed only tentative signs of stabilization, with capacity pressures rising but overall demand still subdued. New orders across the private sector fell at the fastest pace in six months, while employment recorded only marginal growth. Exports continued to weigh on activity, as overseas demand for services remained in contraction. Meanwhile, input cost inflation edged up to a five-month high, prompting firms to raise output charges modestly. Finally, business confidence improved, with year-ahead growth expectations rising to their strongest level since September 2024.

The HCOB France Composite PMI fell to 48.6 in January 2026 from December's 50 and missing market forecasts of 50, flash estimates showed. This pointed to a return to contraction in the country’s private sector for the first time since October last year, following two consecutive months of near stagnation. The services sector weakened notably (PMI at 9-month low of 47.9 vs 50.1 in December), while manufacturing output rebounded modestly (PMI at 51.9 vs 49.7). New business received fell at the fastest pace in six months in January, reflecting subdued demand conditions due to worries about domestic finances and external uncertainties. The rate of job creation edged up to a three-month high but remained marginal. Average prices charged were flat, with input costs rising modestly but still below historical averages. More positively, growth expectations for the next year were the strongest since September 2024, partly reflecting hopes that the budget impasse will be resolved.

The HCOB France Composite PMI for December 2025 was revised marginally lower to 50.0, from a flash estimate of 50.1 and November’s 50.4, signaling broadly stagnant output. The latest data marked a relative improvement for manufacturers (PMI at 50.7 vs 47.8 in November), following the sharpest production downturn in nine months in the previous survey. In contrast, conditions deteriorated in the services sector (PMI at 50.1 vs 51.4), which failed to sustain the strong growth momentum seen in November. New orders and employment across the private sector were broadly unchanged. Exports were a small drag, as weaker overseas demand for services offset record international orders for manufacturers. Meanwhile, prices rose modestly, led by manufactured goods, although overall cost inflation eased broadly. Finally, business confidence in the private sector softened slightly.