France’s private sector experienced a resurgence in August, expanding for the first time since April. This turnaround was primarily driven by the recovery in services activity, according to survey results released by S&P Global.
The composite output index climbed to 52.7 in August, up from 49.1 in July, dpa reported. The reading was expected to remain unchanged at 49.1. This marked the first time since April that the index rose above the crucial 50.0 threshold, suggesting the strongest expansion since March 2023.
The growth in private sector output was exclusively attributed to the services sector. Service providers benefited from the boost provided by the Olympic Games. The services Purchasing Managers’ Index (PMI) soared to a 27-month high of 55.0, up from 50.1 in July.
Read more: Inflation in France slows to lowest point since 2021, records 3.2 percent in March
Conversely, the manufacturing PMI declined unexpectedly to an eight-month low of 42.1, down from 44.0 the previous month. The forecast had been for the manufacturing PMI to rise to 44.4.
“The French economy is poised to experience a 0.5 percent expansion in the third quarter,” noted Norman Liebke, an economist at Hamburg Commercial Bank.
Resilience despite challenges
Last month, the International Monetary Fund (IMF) projected that the French economy is anticipated to grow by 0.9 percent in 2024 and 1.3 percent in 2025.Â
According to the IMF, “despite a recovery slowdown in 2023, the French economy has maintained a relatively resilient posture in the face of financial tightening and weaker euro area external demand.” The financial institution forecasts that French economic growth will converge towards its estimated potential rate of 1.3 percent over the medium-term.
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