France's leading services sector shrank for the eighth month in a row in April, with a sharp decline in new orders, according to the results from a survey released on Tuesday.

The HCOB France Services PMI Index, produced by S&P Global, fell to 47.3 in April from 47.9 in March, indicating an accelerated contraction in the sector. A reading below 50 indicates a decline in activity.

The final services PMI for April came in higher than the preliminary flash estimate of 46.8, Reuters reports.

The survey revealed a significant and accelerating drop in new orders, reflecting persistently weak demand conditions. Despite this, competitive pressures in the market helped keep prices stable, preventing any significant price increases.

This indicates ongoing challenges for the sector, as businesses struggle to manage costs while facing declining demand.

“April marked another month of declining activity in the French private sector,” according to Jonas Feldhusen, Junior Economist at Hamburg Commercial Bank.

“The French services sector remains on a downward trajectory. Business activity declined again in April, attributed to lower customer demand and generally poorer market conditions,” Feldhusen went on to add.

Yet despite the continued contraction, French services companies expressed a modest improvement in optimism for the 12-month outlook. However, confidence levels remained below historical averages, largely due to global uncertainties.

Employment within the sector continued to shrink, with businesses citing challenges in recruitment and a tendency to not replace departing staff as key strategies for reducing workforce numbers, reflecting ongoing caution in managing labour costs amidst a challenging economic environment.

Furthermore, the composite PMI, which combines both manufacturing and services, fell to 47.8 in April, down from 48.0 in March.

However, the final April figure was an improvement over the initial flash composite PMI reading of 47.3.