France composite PMI falls to five-month low in September

French private sector activity contracted at its fastest pace in five months in September, with both manufacturing and services showing renewed weakness, flash purchasing managers' index survey results from S&P Global showed on Tuesday.

The Hamburg Commercial Bank flash composite PMI output index fell to 48.4 points in September from 49.8 in August, remaining below the 50-point threshold that separates growth from contraction for a 13th straight month. The PMI score was the lowest since April.

Manufacturing led the downturn, with factory output index slipping to 45.9 points from 49.8, its lowest level since February. The broader manufacturing PMI dropped to 48.1 points from 50.4 in August, a three-month low.

Service sector activity also weakened, with the business activity index dropping to 48.9 points from 49.8, its weakest reading in two months.

Survey respondents pointed to subdued demand as the main drag, with new orders declining for the 16th consecutive month.

Political uncertainty in France was cited as a factor behind softer client demand. Export conditions remained challenging, though the rate of decline in new export orders eased slightly.

Despite weak demand, private sector employment edged higher for a second consecutive month, according to the survey, marking the first back-to-back gains in over a year. However, job growth was marginal and slower than in August.

Price pressures softened further, survey respondents said. Input cost inflation cooled to a five-month low, while firms cut output prices for the first time since May in an effort to boost competitiveness.

"After signs of stabilisation in the French private sector over the summer months, the September data has brought a sobering reality check," said Jonas Feldhusen, economist at Hamburg Commercial Bank. "Output has declined in both manufacturing and services, with the respective index for manufacturing falling to its lowest level in seven months."

Feldhusen warned that political turbulence and weak demand will likely weigh on household spending and investment, with GDP growth expected to remain subdued at between 0.5% and 1% in both 2025 and 2026.

Final PMI data for September will be released on October 1 for manufacturing and October 3 for services and the composite index.

The PMIs are produced by S&P Global based on survey data collected from around 750 French companies. The flash estimate is based on 85% of total PMI survey responses.