French business activity came close to stabilising in November, according to a survey released on Friday. A stronger-than-expected rebound in the services sector nearly offset a deeper contraction in manufacturing.
The HCOB France flash PMI for services rose to 50.8 this month. This marks the first time in 15 months that the index has moved above the 50-point level, signalling expansion. Economists polled by Reuters had expected the reading to come in much lower at 48.4. In October, the index stood at 48.0.
In contrast, the flash manufacturing PMI dropped to 47.8, a nine-month low, down from 48.8 in October. It also fell short of the forecast of 49.0. This shows that the sector remains under significant pressure.
The composite PMI, which combines both services and manufacturing, climbed to 49.9 from October’s 47.7. This is the highest level in 15 months and well above expectations for 48.1, suggesting that the overall decline in activity is slowing.
“The French private sector shows signs of stabilisation in November after October’s moderate decline,” said Hamburg Commercial Bank economist Jonas Feldhusen. “The service sector is strengthening, but manufacturing is still under strain.”
New orders delivered a mixed outlook. Service providers saw a small improvement in demand, while manufacturers continued to report weakening conditions. However, export orders increased for the first time since February 2022, supported by stronger demand for manufactured goods abroad.
Employment declined in both sectors, posting the first drop since July. Business confidence improved moderately but stayed below long-term averages.
Cost pressures also increased. Input prices rose due to higher metal costs and rising wages. Despite these pressures, selling prices were unchanged, indicating that firms had limited ability to pass on higher costs.
Feldhusen cautioned that the recovery remains fragile, pointing to unresolved budget concerns and ongoing political tensions.
Earlier this month, France’s central bank said the economy is expected to grow slightly in the fourth quarter. It noted that political uncertainty continues to slow the pace of expansion in November, though no specific forecast was provided.
