France Services Contraction Deepens in March

The S&P Global France Services PMI fell to 48.8 in March 2026, revised upward from the initial estimate of 48.3 but down from 49.6 in February, indicating a deeper contraction in the services sector. New business volumes fell at the fastest pace since July 2025, weighed down by subdued client spending ahead of local elections and Middle East conflict-related uncertainty. Export orders continued to contract, extending an eight-month decline. Employment also fell marginally for the first time since late 2025 as firms refrained from replacing departing staff, while backlogs remained broadly unchanged. Input prices rose sharply to a 20-month high, driven by higher fuel costs, supplier price increases, and wage pressures, yet output prices held steady amid competitive pressures. Overall business confidence slipped to a three-month low, reflecting geopolitical and domestic uncertainties, though expectations for the year ahead remained cautiously positive.

The S&P Global France Services PMI fell to 48.3 in March 2026 from 49.6 in the previous month, worse than market expectations of 49, flash estimates showed. It marked the third straight month of contraction and the sharpest pace of decline since October 2025, weighed down by subdued demand amid the Middle East conflict, heightened geopolitical uncertainty, and domestic client caution ahead of local elections. Overall new business fell at the fastest rate since July 2025, with clients holding back on orders, while international demand dropped at its steepest pace in fifteen months. Moreover, services firms saw a slight reduction in staffing as companies opted not to replace departing employees. On the price front, input cost inflation slightly intensified, while output prices remained relatively muted. Finally, confidence weakened sharply, as the Middle East war dampened expectations for the next twelve months, fueling concerns over its impact on demand and inflation.

The HCOB France Services PMI rose to 49.6 in February 2026, confirming preliminary estimates and up from 48.4 in January, signaling a marginal contraction in the services sector. New business inflows fell for the third consecutive month, although the pace of decline eased slightly, while firms continued to work through backlogs to support output. Employment rose for a second consecutive month, with both permanent and temporary hiring contributing to payroll growth. However, activity remained subdued due to weak demand, particularly from international clients, project delays, and adverse weather conditions. Meanwhile, input costs increased at a slower pace, reflecting moderated wage pressures and lower fuel and hardware cost inflation, while output prices rose only marginally as firms sought to pass higher costs onto clients. Optimism about the year ahead remained strong, with overall business confidence holding just below January’s 16-month high.