- Prior 49.3
- Composite PMI 48.8 vs 48.2 prelim
- Prior 48.9
The higher revision means that the French services sector only marginally contracted in June, as the sharpest fall in new orders since January weighed on output. Besides that, there's also softening in sentiment amid the elections with business confidence easing alongside jobs growth. HCOB notes that:
“Election uncertainty stalled the French services sector in June. The HCOB Business Activity Index showed a little improvement compared to the previous month but still stayed below 50, signalling contraction. Some panel members linked the drop in business activity to election-related uncertainty. It’s thinkable that the upcoming elections were the decisive factor, particularly because new orders have suddenly dropped. French service companies completed more backlogs of work in response to weaker demand, which explains the gap between the indices for output and new orders.
“Upcoming elections have made service providers less optimistic about future activity. In addition to business confidence being at a five-month low, it is also clearly below its historic average. In accordance with this, employment growth weakened.
“Service prices inflation continues to ease but still poses a risk. The latest rise in input prices was historically high, with companies noting greater salary costs and raw material price increases. On the other hand, output prices in the French service sector edged further towards the neutral threshold, meaning that companies did not fully pass on higher input costs to clients. According to anecdotal evidence, some companies were able to offer discounts due to lower interest rates.”
