French Private Sector Contraction Deepens in March

France's private sector output extended its contractionary streak to seven months in March, marking the longest period of decline since the onset of the COVID-19 pandemic, according to a Reuters report citing a survey released Monday.

The HCOB flash purchasing managers' index (PMI) for the services sector came in at 46.6 points in March, up from February's 45.3 but still below the 50-point threshold indicating expansion. This reading also beat a Reuters poll forecast of 46.3 points.

The uptick in the PMI suggests a slight improvement in the services sector's performance. However, the composite PMI, encompassing both services and manufacturing, rose to 47.0 points from 45.1 points in February, nevertheless signaling a seventh consecutive month of contractionary activity.

The March manufacturing flash PMI also showed improvement, rising to 48.9 points from 45.8 points in February, exceeding a Reuters forecast of 46.5 points. Despite this uptick, the sector remains in contractionary territory.

S&P Global highlighted that French companies anticipate weaker activity levels over the next 12 months, with business sentiment reaching its lowest point in nearly five years.

"France's economy is struggling to gain momentum. Although the HCOB French Flash PMI improved in March compared to the previous month, it remains in contraction territory," said Tariq Kamal Chaudhry, economist at Hamburg Commercial Bank, to Reuters.

Chaudhry added that while France's delayed budget law for 2025 helped avert a credit rating downgrade, uncertainty persists regarding future economic policy.