France Services Contraction Unexpectedly Deepens

The S&P Global France Services PMI fell to 48.4 in August 2026 from 49.6 in July, signaling a faster contraction in services activity, preliminary estimates showed. The reading also defied market expectations for the contraction to ease to 49.8. The downturn was accompanied by further workforce cutbacks, contrasting with the fastest pace of factory job creation in a year. Cost pressures increased at a faster pace among service providers, while selling prices rose at the fastest rate since May. Service companies also cleared backlogs of work at a faster pace in August. Business confidence weakened, with optimism toward the year-ahead outlook falling to its lowest level since May amid uncertainty surrounding the international landscape and domestic political situation.

The S&P Global France Services PMI rose to 49.6 in July 2026, revising slightly lower from the preliminary estimate of 49.8, but improved from June's 46.8. The latest reading signaled only a marginal contraction in business activity, marking the softest decline since the contraction began in the second quarter. The downturn eased as new orders increased for the first time since November, supported by stronger domestic demand. However, export sales declined for a twelfth consecutive month, highlighting continued weakness in overseas demand. Labor market conditions weakened further, with employment falling at a faster pace due to the expiration of fixed-term contracts and the non-replacement of voluntary leavers. On the price front, input cost inflation eased to a five-month low, while output charge inflation slowed to a three-month low. Lastly, business confidence improved but remained subdued amid concerns over the political environment and higher interest rates.

France's S&P Global Services PMI rose to 49.8 in July 2026, up from 46.8 in the previous month and exceeding market expectations of 47.5, signaling the softest contraction in business activity in seven months as the index moved closer to the 50.0 threshold. The latest reading was the highest since the outbreak of the Middle East conflict, reflecting a broad stabilization in the services sector. Demand improved, with new business expanding for the first time since November, supported by stronger domestic sales, although new export orders continued to decline sharply for an eighth consecutive month. Employment fell for a third straight month as firms remained reluctant to hire amid subdued business confidence, with some citing uncertainty ahead of next year's presidential election and the ongoing economic fallout from the Middle East conflict. On the price front, both input cost and output price inflation eased for a second straight month, further moderating price pressures.