FX.co ★ France Private Sector Activity Contracts Further

Private sector activity in France further contracted towards the end of the first quarter at a faster rate due to a decline in output and demand, according to recent data provided by S&P Global. The HCOB composite output index, which is a measure of economic health, declined to 47.7 in March from a nine-month high of 48.1 in February, contrary to economists' expectations of an improvement to 48.6.

Interestingly, despite the contraction being bigger this month than in February, this fall is the second smallest observed throughout the currently ongoing ten-month economic decline. The data points out that the marginally faster contraction in March was propelled by a steeper drop in the services sector activity. However, the decline in manufacturing output softened further, with output falling the least since January 2023.

Surprising many, the flash services Purchasing Managers' Index, another economic health indicator, fell unexpectedly to 47.8 from 48.4 last month, against a forecast of 48.7. Similarly, the flash manufacturing PMI dropped to 45.8 from 47.1 recorded a month ago, also missing the expected increase to 47.5.