French Private Sector Downturn Slows

(RTTNews) - France's economic downturn continued in March but the pace of decline slowed moderately driven by tentative signs of recovery in the manufacturing sector, flash survey results published by S&P Global showed on Monday.

The HCOB composite output index posted a two-month high of 47.0 in March, up from 45.1 in February.

However, a reading below 50.0 indicates contraction. The private sector has contracted for the seventh straight month.

The survey showed that both the manufacturing and service sectors posted shallower contractions in output at the end of the first quarter. The services Purchasing Managers' Index rose more-than-expected to 46.6 in March from 45.3 in the prior month. The reading was seen at 46.3.

At 48.9, the factory PMI hit a 26-month high and climbed from 45.8 in February. The score was forecast to improve to 46.2.

Total new orders received by private sector companies declined in March but at a less severe pace than in the previous month, reflecting slower falls in new business receipts at both manufacturers and service providers.

Backlogs of work decreased in March, extending the current period of depletion to 20 months.

Payroll numbers dropped for a fourth straight month, marking the longest sequence of job shedding since late 2020. Workforce numbers decreased only in the service sector as factory staffing levels rose for the first time since May 2023.

Business confidence was at its weakest level in almost five years. Uncertainty, competitive pressures and subdued conditions in major industries were cited by firms as reasons for the weakness.

Regarding prices, the survey showed that input price rose at the softest rate in three months. At the same time, output price inflation for goods and services was unchanged from February.

"France's economy is struggling to gain momentum," Hamburg Commercial Bank Economist Tariq Kamal Chaudhry, said.

"The French political landscape, which has significantly negatively impacted market sentiment in recent months, is now somewhat less unstable," Chaudhry added.

The economist said France passed a delayed budget law for 2025 in February which helped it avoid a downgrading of its credit rating, but there is still a high degree of uncertainty regarding future economic policy.