French architecture in France

France PMI February 2024

France: French service sector shows signs of stabilizing in February

The HCOB France Services Purchasing Managers’ Index (PMI) rose to 48.4 in February from January’s 45.4, indicating a slight improvement since last month. While the index remained below the 50.0 no-change threshold, the reading signaled a softer deterioration in service sector operating conditions compared to the previous month.

The decline in business activity in the service sector slowed markedly. This improvement was largely driven by a recovery in demand conditions, with new export sales expanding for the first time since the previous May. The sector also saw the softest decrease in total new business in nine months, buoyed by new customer acquisitions. Additionally, employment levels in the sector grew, with increases in both temporary and permanent recruitment, indicating a positive shift in demand and business activity trends.

On the price front, the service sector faced persistent but cooling cost inflationary pressures, with input costs rising at the slowest pace in two-and-a-half years but remaining high by historical standards due to ongoing wage pressures. Despite these cost challenges, service providers were much less aggressive in raising their prices, with the increase in selling prices the weakest since May 2021. This adjustment in pricing, alongside a notable improvement in business sentiment— where growth expectations reached a seven-month high—reflects a cautiously optimistic outlook among service sector companies regarding future business conditions.

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