Introduction
The latest survey reveals a rapid decline in French business activity in December, signaling further deterioration in the demand for goods and services in the Eurozone’s second-largest economy. The HCOB France flash Purchasing Managers Index (PMI) for the dominant services sector, compiled by S&P Global, reached a 37-month low of 44.3 points. This level is below the growth threshold of 50 for the seventh consecutive month.
Services Sector
The December flash services PMI, predicted to be 46.0 based on a Reuters poll, fell short at 44.3 points. This decline indicates a deepening contraction in the services sector compared to the previous month’s final figure of 45.4. Economist Tariq Kamal Chaudhry from Hamburg Commercial Bank stated that both domestic and international orders have plummeted, intensifying concerns about employment and job losses.
Manufacturing Sector
The flash manufacturing PMI for December dropped to 42.0 points, a 43-month low, compared to 42.9 in November. It also fell below the Reuters poll forecast of 43.3 points. The contraction in the manufacturing sector adds to the economic challenges faced by France.
Composite PMI
The flash December composite PMI, which combines both the services and manufacturing sectors, declined to 43.7 points from November’s 44.6. The actual figure was lower than the forecasted 45.0 points, indicating a further decline in overall economic activity in France.
Weakened Growth Forecast
France’s INSEE statistics agency recently reduced its growth forecast for 2023 from 0.9% to 0.8%. This downward revision falls short of the government’s budget planning figure of 1%, leaving the country on an uncertain footing as it approaches 2024.