French Private Sector Downturn Deeper After Revision

The HCOB France Composite PMI for August 2026 was revised down to 48.5 from a flash estimate of 48.8, and below July's 49.4. The data confirmed an eighth consecutive month of contraction, with the pace of decline quickening from July. The downturn remained entirely concentrated in services, as manufacturing output posted a marginal increase in August. Demand, however, stayed weak across the board, resulting in lower total new orders and a sharper fall in backlogs. Employment declined again, while easing input cost pressures, which reached a six-month low, failed to translate into lower output price inflation. Latstly, business confidence slipped for the first time since May.

The S&P Global France Composite PMI eased to 48.8 in August 2026 from 49.4 in July and worse than market forecasts of 49.5, flash estimates showed. The data signaled the eighth straight month of decline in the country’s private sector, with the pace of contraction quickening from July. The weakness stemmed entirely from services, while manufacturing output rose for the first time since April. Respondents often cited extreme heat as a factor behind lower activity levels and demand. New orders declined at a faster pace, extending the current run of lower sales volumes to nine months. At the same time, export activity deteriorated further. Payroll numbers fell for the fourth month running, reflecting job losses in services. Meanwhile, input cost inflation eased to a five-month low, while output charge inflation was largely unchanged. Business confidence weakened, with optimism falling to its lowest since May amid international and domestic political uncertainty.

The S&P Global France Composite PMI rose to 49.4 in July 2026 from 47.2 in the previous month, and slightly below market expectations of 49.6, signaling the softest contraction in private sector activity in five months, though remaining below the 50.0 threshold for a seventh consecutive month. Demand for French goods and services broadly stabilized, supported by a renewed increase in domestic orders that helped offset a further marked decline in export business. Business activity continued to edge lower but at only a marginal pace, while firms cleared outstanding work more quickly even as employment contracted at a faster rate. Meanwhile, inflationary pressures eased broadly across the private sector, with slower increases in both input costs and output charges. Looking ahead, business confidence improved further, although optimism remained historically subdued amid concerns over the political environment and higher interest rates.