- Composite PMI 52.7 vs 52.7 prelim
No change to the initial estimates as this reaffirms that French services activity slows to a nine-month low amid tighter restrictions and surging COVID-19 cases due to the omicron spread. Of note, there were also reports on insufficient staff levels that hindered business operations. Markit notes that:
"The slowdown in service sector growth was to be expected in January. The Omicron variant has spread rapidly across France and has unsurprisingly weighed on client demand and the level of activity service providers can generate. According to anecdotal evidence, staff availability took a hit as the surge in COVID-19 cases led some businesses to be short on workers. Activity growth slowed to a nine-month low and was the second-weakest expansion since the sector's recovery began last April.
"However, France has been relatively lenient with its approach to Omicron by comparison with other European peers, opting to avoid applying the strictest measures. Indeed, this seems to have paid some dividends as demand and activity have both remained fairly resilient.
"The bad news primarily resides with regards to selling price and input cost inflation, which both accelerated to rates not seen in over two decades. There were also reports of salaries rising, compounding higher energy prices. The concern here is that rising salaries could cause inflation at this level to become entrenched."
