French business activity unexpectedly contracts in January: PMI
This reflects continued uncertainty on the trade policy front despite prior trade agreements
[PARIS] French business activity unexpectedly contracted in January, after two months of meagre growth, based on a survey published on Friday (Jan 23), as a sharp drop in demand for services outweighed rising output in the manufacturing sector.
The Hamburg Commercial Bank (HCOB) France flash purchasing managers index (PMI) for the country’s dominant services sector, compiled by S&P Global, came in at 47.9 points in January, a three-month low.
The index fell again below the 50 points threshold separating growth from contraction, where it has been for 10 of the last 12 months. A Reuters poll forecast for the January flash services PMI stood at 50.5, and the final December figure was at 50.1.
The flash manufacturing PMI for January reached 51 points – a 43-month high from 50.7 in December – and above a Reuters poll forecast of 50.5 points.
The flash January composite PMI, which comprises both the services and manufacturing sectors, slipped to 48.6 points from 50 in December, which is well below a forecast of 50 points.
“The French private sector entered the new year on a muted note. The HCOB Flash PMIs point to a broad-based softening in export conditions, reflecting continued uncertainty on the trade policy front despite prior trade agreements,” said HCOB economist Jonas Feldhusen.
Navigate Asia in
a new global order
Get the insights delivered to your inbox.
“Nonetheless, the HCOB flash PMIs showed a modest improvement in manufacturing, whereas activity in the services sector weakened notably at the start of the year.
“The prospect of a resolution over the 2026 national Budget offers some relief, as it reduces the risk of a renewed political crisis in the near term,” he added.
On Jan 21, French Prime Minister Sebastien Lecornu used a special constitutional power to force part of his 2026 Budget Bill through the deeply divided Lower House of Parliament without a vote, bringing France closer to getting a 2026 Budget.
In December, the national statistics agency INSEE forecast France’s economy, the eurozone’s second-largest, to post moderate growth in early 2026, with resilient household spending offsetting weaker foreign trade. REUTERS
Decoding Asia newsletter: your guide to navigating Asia in a new global order. Sign up here to get Decoding Asia newsletter. Delivered to your inbox. Free.
Share with us your feedback on BT's products and services
