Paris – The French private sector recorded its most rapid expansion in just over two years in September, according to the latest S&P Global Flash France Composite Output Index. The preliminary index rose to 51.2 from 48.5 in August, moving further above the 50‑point threshold that separates growth from contraction.
Services lead the surge
Service‑sector activity supplied the bulk of the momentum, with the Flash France Services PMI Business Activity Index climbing to 51.4 from 48.0, a ten‑month high. The increase reflects stronger demand for hospitality, retail and other consumer‑facing businesses after a prolonged slowdown.
Manufacturing remains modest
Manufacturing output continued to grow only marginally, indicating that the sector’s recovery is still tentative. New orders rose for the first time in ten months, but the pace was modest, and firms’ own expectations for activity deteriorated, according to Joe Hayes, Senior Principal Economist at S&P Global Market Intelligence.
Labor market pressures persist
Despite the upbeat output figures, companies reported a fifth consecutive month of staff reductions. Respondents cited redundancies, resignations and the non‑renewal of temporary contracts as the primary reasons for the ongoing cuts.
Rising input and output costs
Both input costs and output charges accelerated at their fastest rates since May, driven by higher fuel, energy, metal and component prices. These cost pressures are weighing on profit margins even as demand improves.
Business confidence wanes
Survey participants indicated that expectations for the year ahead have slipped to their lowest level since May. Higher interest rates, political uncertainty and intensified international competition were cited as key factors dampening optimism.
Overall, the data suggest that while the French economy is showing resilience, the durability of the current expansion remains uncertain. Policymakers will need to address cost pressures and labor market challenges to sustain the positive trend.
Original reporting: Appleton, WI News Feed (HLL/CB) — read the source article.
