France's Services Sector Contracts in September

PARIS (Reuters) – France's services sector contracted in September, although the decline was less severe than initially expected. This comes after strong growth in August, spurred by the Paris Olympic Games, according to a survey published on Thursday by S&P Global.

The HCOB France Services PMI fell sharply to 49.6 in September from 55.0 in August, indicating a marginal contraction in activity. A reading below 50.0 signals a decline, while readings above that mark indicate growth.

September's flash services PMI stood at 48.3 points.

"The Olympic euphoria has faded: Following the conclusion of the Olympic Games, the service sector has lost its growth momentum," stated Dr. Tariq Kamal Chaudhry, Economist at Hamburg Commercial Bank.

Declining customer numbers, reduced willingness to spend, and uncertainty were cited by surveyed companies as the primary reasons for the downturn in activity.

Despite these challenges, business confidence surged to its highest level since July 2022, partly due to recent rate cuts by the European Central Bank. This optimism has aided continued hiring, with some companies expecting a pick-up in activity later this year and into 2025.

Overall, the data suggests that while the immediate post-Olympic period has been tough, there are signs of resilience and cautious optimism in the French services sector.

The final composite PMI figure for September, which includes both the services and manufacturing sectors, was also higher than initially estimated, at 48.6 points, down from 53.1 points in August and 47.4 points initially estimated. That figure has exceeded the 50-bar only twice since the year began, in August and in April.