FX.co ★ French Private Sector Returns to Contraction

In January 2026, the HCOB France Composite PMI was adjusted upward to 49.1 from an initial estimate of 48.6, yet it remained under December's figure of 50.0. This most recent data indicates a resurgence of weakness within the private sector, primarily impacted by the services sector, where the Business Activity Index declined to 48.4 from 50.1 in December, signaling its first contraction since October. The manufacturing sector displayed tentative signs of stabilization, with increasing capacity pressures, although overall demand continued to be lackluster. New orders within the private sector dropped at the sharpest rate in six months, and employment growth was minimal. The decline in overseas demand for services maintained pressure on activity, continuing a trend in export contraction. Additionally, input cost inflation reached a five-month high, leading companies to incrementally increase output charges. Despite these challenges, business confidence showed improvement, with growth expectations for the coming year climbing to their highest point since September 2024.