French private sector shrinks to 10-month low in November

The French economy contracted at its fastest pace since January, according to preliminary purchasing managers' index (PMI) data released by S&P Global on Friday.

French private sector shrinks to 10-month low in November

The flash PMI composite output index dropped to 44.8 in November from 48.1 in October, significantly below the 50-point threshold that separates growth from contraction. This figure also fell well short of the FXStreet-cited consensus of 48.1. For the first time since May 2020, French businesses expressed negative expectations for economic activity over the next 12 months. The flash services PMI business activity index declined to 45.7 in November, down from 49.2 in October, missing consensus estimates of 49.0. "The service sector is shrinking, and French service providers are now facing the same grim outlook as the industrial sector," said Tariq Chaudhry, an economist at Hamburg Commercial Bank. Survey participants cited weak demand driven by political and geopolitical uncertainties.

Manufacturing index also fall

In manufacturing, the flash PMI index fell to 43.2 in November from 44.5 the previous month, below the expected 44.5. The manufacturing PMI output index sank to 40.7 from 43.1, an 11-month low. Respondents pointed to challenges in the automotive, construction, and cosmetics sectors. "Factory orders are shrinking both domestically and internationally," Chaudhry explained. "Despite weak demand, manufacturers saw a sharp rise in input prices compared to the prior month, even as output prices fell. This led to continued workforce reductions in November." Chaudhry also highlighted the broader issues plaguing the French economy, including political uncertainty surrounding the 2025 budget, which has added to the challenges. The composite PMI, compiled by S&P Global from surveys of 750 companies across France's manufacturing and service sectors, was based on responses collected between November 12 and 20. Final PMI data for manufacturing will be released on December 2, with services and the composite reading following on December 4.