Key insights
- French service sector contracts at the fastest pace in 14 months, driven by slower client decision-making, cost pressures, and geopolitical conditions. Input costs rose sharply, with inflation reaching a 29-month high. Business confidence fell to a four-month low due to rising inflation expectations and concerns about the Middle East conflict. While this is primarily a European event, it signals potential global economic slowdown, which could have a minor negative impact on US equities.
Investing.com -- France’s services sector fell deeper into contraction in April, with business activity declining at the sharpest rate in 14 months, according to the S&P Global France Services PMI released Wednesday.
The Services Business Activity Index dropped to 46.5 in April from 48.8 in March, marking its lowest reading since February 2025. A reading below 50 signals contraction, and April marked the fourth consecutive month of decline for the sector.
New business volumes fell at the fastest pace since November 2023, driven by slower client decision-making, cost pressures and unfavorable geopolitical conditions. New export sales also declined at the quickest rate in nearly 18 months as foreign demand weakened.
The reduction in new orders led to greater backlog clearances, with work-on-hand declining at the most marked rate in 14 months as companies had more capacity freed up.
Despite the contraction, workforce numbers increased across the services sector in April, though the rate of job creation remained marginal. Some companies hired additional staff as part of business development plans.
Input costs rose sharply, with the rate of inflation reaching a 29-month high. Companies cited higher fuel, energy and material costs as key drivers. However, prices charged for services saw only a limited increase, with approximately 10% of firms raising fees compared to 6% offering discounts amid strong market competition.
Business confidence for the 12-month outlook remained positive but fell to a four-month low. Expectations of rising inflation and concerns about the ongoing Middle East conflict dampened sentiment.
The S&P Global France Composite PMI Output Index, which combines manufacturing and services, fell to 47.6 in April from 48.8 in March, indicating the fastest decline in private sector business activity in just over a year.
Joe Hayes, Principal Economist at S&P Global Market Intelligence, noted that while manufacturing showed expansion, likely due to front-loaded ordering ahead of anticipated price increases, the services sector has seen demand weaken from increased uncertainty.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.