The HCOB France Composite PMI dropped to 47.3 in April 2025, down from 48 in March and falling short of market expectations of 47.8, according to flash estimates.
France private sector faces continued downturn
This marks the eighth consecutive month of declining activity, signaling a prolonged slowdown in the French economy. The latest data highlights a sharp reduction in new business, as demand remains subdued across key sectors.
The services sector, which has been a crucial driver of economic activity in France, was the primary contributor to the overall contraction, with the PMI falling to 46.8 from 47.9 in March. This was the steepest decline in services activity since early 2024, driven by weakening consumer confidence, lower spending, and growing caution from businesses. With fewer clients and reduced demand for services, firms are facing a tightening environment, making it difficult to sustain growth.
Meanwhile, the manufacturing sector also showed signs of strain, although it performed slightly better than services. The manufacturing PMI edged down to 48.2 from 48.5, marking the seventh consecutive month of contraction, albeit at a slower pace. Despite a reduction in production output, there were indications of some resilience within certain subsectors, with manufacturers trying to adapt to shifts in global trade and supply chain disruptions. However, export orders remained weak, and the outlook for the sector remained bleak as the effects of inflation and trade uncertainties continued to weigh on manufacturers' operations.
French businesses became increasingly pessimistic about the future
Looking ahead, French businesses became increasingly pessimistic about the future. Confidence fell to its lowest level in almost five years, with firms citing mounting risks related to global trade tensions, rising energy costs, and political uncertainties both within France and across Europe. This decline in optimism signals that businesses expect little improvement in the economic environment in the near term, further reinforcing concerns that the French economy may struggle to regain its momentum anytime soon.
With both the services and manufacturing sectors showing signs of ongoing weakness, there are growing fears that France could be entering a prolonged period of stagnation. The continued decline in confidence and the persistent slowdown in activity raise questions about the effectiveness of current fiscal and monetary policies, and whether additional stimulus measures will be needed to prevent further economic deterioration.
