France's services sector contracted sharply in September, following a strong August driven by the Olympic Games, according to a survey of business executives.
The HCOB Flash France Services PMI dropped to 48.3 in September from 55.0 in August, marking a six-month low. Any figure below 50 indicates a decline in activity.
The survey suggests France's economy faces significant headwinds as it moves into the final quarter of the year, joining other euro zone economies, notably Germany, which are struggling to grow.
'Deep Disappointment'
"There is deep disappointment in the French services sector," said Tariq Kamal Chaudhry, economist at Hamburg Commercial Bank.
The composite PMI, which combines both manufacturing and services, tumbled to an eight-month low of 47.4 from 53.1 in August, indicating renewed contraction in the private sector economy overall.
Manufacturing remained in contraction territory with a PMI of 44.0, little changed from 43.9 in August.
'Accelerated Contraction'
'Overall business activity levels fell at the fastest pace since January amid an accelerated contraction in new orders, which panellists attributed to slowing market conditions and a shrinkage in customer numbers,' the report noted. 'Backlogs of work decreased at the quickest rate since last November, although employment grew marginally after a small drop in the previous survey period.'
Despite the downturn, business confidence showed resilience in the services sector but pessimism persisted in manufacturing, the survey found.
"The situation remains bleak, and industrial companies lack optimism," Chaudhry added.
"Orders from North America and key European markets like Germany are particularly affected. Politically, the situation remains unstable following the snap elections and the appointment of Michel Barnier as Prime Minister, with no clear parliamentary majority in place to push through the significant economic reforms that could revive the industry.”
Additional reporting by ESM
