France: Composite PMI dips into contractionary territory in August
The S&P Global Flash Purchasing Managers Index (PMI) fell to 49.8 in August from 50.6 in July, marking the lowest reading since February 2021. As such, the index moved below the 50-threshold, signaling a milder improvement in business conditions from the previous month.
Augusts fall into contractionary territory was due to a continued decline in manufacturing and weaker growth in services. Overall demand once again took a toll on new business and led new orders to tumble for manufacturers. As a result, businesses increased their headcounts at the slowest rate in over a year and reported their lowest levels of optimism in nearly two years.
Conversely, on the price front, a hint of positivity emerged: Input cost inflation moderated further in August, while delivery disruptions improved.
Commenting on the outlook, Joe Hayes, senior economist at S&P Global, commented:
“European economies look set for a challenging run into year-end and France is no exception. High inflation has squeezed purchasing power among consumers and businesses alike, although we saw further signs to suggest we have passed peak price pressures. […] The downward trend in the France PMI may well persist now [that demand for goods and services is falling.”