- Services PMI 47.6 vs 47.6 prelim
- Prior 48.8
- Composite PMI 47.6 vs 47.6 prelim
- Prior 48.8
The readings were not changed from the initial estimates, reaffirming a further decline in French services and overall business activity in April. Of note, new orders were seen falling at the fastest rate since November 2023. The survey revealed slower decision-making from clients, cautiousness, cost pressures and unfavourable geopolitical conditions as key factors in denting sales activity.
Meanwhile, inflation pressures were also a key negative driver as the rate of input price inflation rose to a 29-month high in April. The only good news is that at least prices charged for French services saw only a limited uptick. HCOB points out that: "Around 10% of panellist lifted their fees, which was only narrowly above the proportion who offered discounts (6%)."
Full notes:
"Services and manufacturing pulled the French economy in different directions in April. We should probably discount the factory expansion, though, which is likely to be fleeting due to front-loaded ordering ahead of anticipated price increases. Services, on the other hand, has seen a significant hit to demand from increased uncertainty, with activity in this part of the economy weakening as a result.
"What's interesting is that, although input price inflation in the service sector has soared, prices charged have barely moved since February. Given the subdued sales environment, service providers may be hesitant to bring about even further demand destruction. There may also be some expectation from firms that the inflation wave is not here to stay, meaning they are allowing margin compression for the time being."
