France November final services PMI 46.9 vs 45.7 prelim

• Prior 49.2
• Composite PMI 45.9 vs 44.8 prelim
• Prior 48.1

The revisions are positive but they are still markedly lower compared to the October readings. Of note, French services demand experienced its sharpest decline in a year as business confidence also sunk to a four-and-a-half year low. Pain. HCOB notes that:

“The positive signals from the HCOB PMI for the French service sector that were seen over the summer, partly due to the
Olympics, are now a thing of the past. This sector is also suffering from political uncertainty. Demand fell sharply in
November, sending a negative signal for early 2025. The HCOB PMIs also imply that international order intakes are
shrinking more significantly than domestic ones, , with demand for French services from abroad seeing the steepest decline
in four years in November.

Despite the significant cooling of demand in the fourth quarter, input prices continue to rise. Companies report higher labor
costs, which are attributed to both increased employment and salary rises. Union activities, strong worker protections, and a
shortage of skilled labor may also be factors at play here. Employment saw a slight uptick in November compared to the
previous month, but if the trend of declining demand persists, the employment situation could reverse into layoffs at the
beginning of 2025.

The weakness in France does however appear to be somewhat self-inflicted, with the political situation partly to blame for
French service companies looking towards the future with little optimism. Since President Macron called the snap elections
in June, the HCOB Future Activity Index has fallen by ten points, to stand at its lowest level in four-and-a-half years. This
shows how fragile business sentiment is against the backdrop of further political uncertainty should Michel Barnier’s minority
government end in collapse over the budget deadlock. Coupled with the general economic situation and cooling demand, it
is no wonder business confidence is low.”

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