The HCOB France Composite PMI for March 2025 was revised slightly upward to 48, from the flash estimate of 47, and above February's 13-month low of 45.1.
French private sector remains strained
Despite this revision, France's private sector continued to experience its seventh consecutive month of contraction. However, the downturn was relatively mild and the least severe since October, suggesting that the French economy is showing some signs of stabilization. Manufacturing activity saw a mild uptick, with the PMI rising to 48.5 from 45.8 in February, marking the softest contraction in over two years. This suggests that the manufacturing sector is gradually recovering, though it remains in negative territory.
The services sector, while also showing a slight improvement (PMI at 47.9 compared to 45.3 in February), continued to be mired in contraction, indicating that challenges remain for this segment of the economy. In March, the decline in output was more moderate, and the reduction in new business also slowed, hinting that the services sector may be approaching a turning point, though it is not yet back to growth.
Job cuts continue
Employment levels continued to shrink for the fourth consecutive month, but the pace of job losses was the slowest in this period, indicating that companies may be becoming more cautious about further staff reductions. Despite this, the overall labor market remains weak, with firms still reluctant to hire in large numbers due to ongoing uncertainty.
On the inflation front, there was some relief, as inflationary pressures eased. Selling charges rose only marginally, and operating costs increased at the softest pace of the year, providing some respite to businesses struggling with rising input costs. Finally, business confidence saw a slight pick-up, although the outlook remained subdued compared to historical norms. Firms were cautiously optimistic, but concerns over broader economic conditions, including inflation and demand weakness, tempered expectations for a stronger recovery in the near term.
