France August final services PMI 55.0 vs 55.0 provisional

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• Composite PMI 53.1 vs 52.7 preliminary
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The boost in August is likely a one-off, largely driven by increased demand from the Paris Olympics. This is evident from the fact that the rebound in new business was relatively weak and below the survey average. Although input cost inflation continued to ease, French service providers increased their rates more aggressively during the month. The pace of increase was the steepest since April.

HCOB notes that:

“This is not a sustainable level. The French services sector saw an increase of almost five points in its Business Activity PMI in August, reaching its highest level since May 2022. HCOB Economics believes this is due to the Olympic Games, which was partly reflected by some companies reporting more new export activity. This one-off boost is not visible in other PMI sub-indices, as only business activity and new orders showed a significant improvement. The employment situation improved at a slower pace and outstanding cases fell at a faster pace compared to July.

“French service providers managed to raise their prices. Output price inflation accelerated in August compared to July. It was also notable that, despite further increases in input costs, the pace of increase slowed to a 39-month low. However, wages remain the main source of cost inflation and were again cited by panellists.

“Although the employment situation in the French services sector is improving, the associated HCOB PMI is approaching the neutral threshold. It seems that the HCOB Employment PMI will soon cross the threshold, based on the current trajectory of the index, which means that unemployment could rise in the coming months.”