France June flash services PMI 48.7 vs 49.2 expected

• Prior 48.9
• Manufacturing PMI 47.8 vs 50.0 expected
• Prior 49.8
• Composite PMI 48.5 vs 49.3 expected
• Prior 49.3

The downturn in the French economy continues, with the latest readings here being a bit of a setback amid another deterioration in demand conditions. The employment situation also took another knock with job cuts picking up. Overall, that just highlights the struggling momentum in France in trying to get off the floor. HCOB notes that:

“This is a little setback. Since the middle of the first quarter, the headline French HCOB PMI has risen significantly, which
had sparked hopes for a recovery in the French private sector. This upward movement was particularly supported by the
positive trend in the manufacturing sector. That momentum has now come to a halt, as manufacturing suffered a setback in
June, which is weighing on the overall development and dragging down the Composite PMI. The performance of the
services sector is underwhelming, though it was broadly similar to the previous month, unlike the manufacturing sector.

“Overall, the question arises whether the decline in manufacturing output this month represents a mere temporary dip or
already marks the end of the upward trend. The outlook is certainly clouded, as domestic demand for goods has weakened,
as indicated by the decline in new orders. While the ECB’s interest rate cuts, deregulation efforts at the EU level, and
planned defence investments are likely to continue providing support to the manufacturing sector, uncertainties surrounding
global trade and geopolitics – now further exacerbated by escalations in the Middle East – as well as global competition, are
dampening the outlook.

“Since the beginning of the year, price developments have contributed little momentum. That remains unchanged this
month. After declining in May, output prices rose marginally in June, but remained at a low level. However, input prices
continue to hover at a relatively elevated level, both in services and manufacturing, which is likely to put pressure on
corporate margins. A potentially structurally higher oil price as an economic consequence of the Middle East conflict could
further exacerbate this issue.”

This article was written by Justin Low at www.forexlive.com.