French business activity nearly returned to growth in August, marking the strongest performance in a year and beating expectations. A monthly survey signaled early signs of stabilization in the euro zone’s second-largest economy after a long period of contraction.
The HCOB France flash Purchasing Managers Index (PMI) for the services sector, compiled by S&P Global, rose to 49.7 points in August. That was its highest level since August 2024 and just below the 50-point threshold that separates growth from contraction.
Economists in a Reuters poll had forecast the August services PMI at 48.5, matching July’s final reading.
The flash manufacturing PMI also surprised to the upside, climbing to 49.9 points in August, a 31-month high, compared to 48.2 in July. Analysts had expected just 48.0 points.
The composite PMI, which combines services and manufacturing, improved to 49.8 in August from 48.6 in July, again beating the forecast of 48.5.
For the first time since last November, employment levels increased, with job creation reaching a 16-month high despite weak outlooks for the year ahead.
“France’s composite PMI remained under 50, highlighting ongoing economic weakness,” said Jonas Feldhusen, Junior Economist at Hamburg Commercial Bank. “However, the smaller contractions in both services and manufacturing may be an early sign of stabilization.”
Official data published in late July showed that the French economy grew 0.3% in Q2, stronger than expected, supported by a rebound in household spending. This followed a 0.1% GDP expansion in Q1.
