The dominant services sector in France picked up last month, bolstered by business from the Olympics, according to the findings from a survey published on Monday.
The HCOB France final purchasing managers index (PMI) for the services sector, compiled by S&P Global, increased to 50.1 in July from June’s reading of 49.6, broadly aligned with the 50.7 mark from a previous flash estimate.
The 50-level separates growth from contraction.
In addition, a composite final PMI, which combines data from the services and manufacturing sectors, increased to 49.1 points in July from 48.8 in June, Reuters news agency reports.
The Olympic Games, underway until 11th August, had given a boost to the services sector, according to Hamburg Commercial Bank economist Norman Liebke.
“The Olympic Games are boosting the French economy. According to anecdotal evidence, there are companies for which the Olympic Games are generating unusually high business activity in July,” he said.
“This does, however, mean that business activity might drop in September when the Olympic Games are over. Additionally, lower uncertainty due to the end of the election period increased activity levels," he went on to say, in reference to parliamentary elections in France which ended on 7th July.
“In the third quarter, the French economy might grow in the ballpark of 0.5% to 0.6% because of the Olympic Games and due to stronger growth in the service sector, which we also might see in the August HCOB PMI figures,” he added.
Furthermore, employment growth in France fell further to a five-month low last month. Liebke went on to say: “Prices still pose a risk. In July, input and output prices increased at a faster rate compared to the previous month. Input prices accelerated due to salary increases on a broader scale, while some companies remarked on broad-based inflationary pressures. Accordingly, selling prices rose as companies passed on the higher input prices.”