French Private Sector Falls Back Into Contraction

(RTTNews) - France's private sector activity contracted in October, marking a reversal from September's growth rebound, survey results from S&P Global showed Friday.

The flash composite output index fell to a four-month low of 48.4 in October from 51.1 in the previous month.

Economists had forecast the index to drop moderately to 50.5. Moreover, a score below neutral 50.0 indicates contraction.

"September's rebound in economic activity proved to be short lived, which is hardly surprising given the rapid tightening of financial conditions and a further increase in political pressures across France during October," S&P Global Market Intelligence Senior Principal Economist Joe Hayes said.

The services Purchasing Managers' Index posted 48.4, down from 51.2 in September. At the same time, the manufacturing PMI hit an 11-month low of 49.3 compared to 50.6 in the prior month.

Demand for goods and services recorded the sharpest fall since May. New business from abroad remained a drag on total order books. Firms cited challenging economic conditions as a reason for reduced investment and spending activity.

Regarding business expectations, the survey showed the most pessimistic assessment of the French economic outlook in six-and-a-half years.

Further, firms reduced jobs for the sixth straight month in October. Reduced workforce numbers did not hinder firms' ability to clear outstanding business.

On the price front, the survey showed an easing of inflation in October. Input cost and output charge inflation eased from September, which was entirely services-led, as a worsening of supply-chain conditions drove manufacturing price pressures higher.