Services sector moving “gradually towards stagnation”

05 Sep 2022

The services sector in France lost momentum in August, coupled with a gloomy outlook amongst purchasing managers, according to the results of a survey published on Monday.

S&P Global’s final monthly purchasing managers index for services in August declined to 51.2 points from 53.2 in July, although a marginal increase from an initial late-August forecast of 51.0. The 50-mark separates growth from contraction.

“French service sector activity appears to be moving gradually towards stagnation territory, and forward-looking indicators suggest worse is to come,” according to a statement by S&P economist Andrew Harker.

In addition, the composite PMI index, which takes into account the services and manufacturing sectors – stood at 50.4 in August, a decline from July’s reading of 51.7, Reuters reports.

Furthermore, new orders within the French services sector fell under the 50-level for the first time since the beginning of last year, whilst business expectations dropped to a 21-month low.

According to S&P Global, the drop was predominantly a result of weaker demand as the business climate becomes gloomier.

“The latest figures for services suggest that the overall economy is stagnating during the third quarter and on a weak footing as the final months of the year approach,” the S&P economist went on to say.

The country’s Economy Minister Bruno Le Maire last week said the government’s full-year economic growth forecast of 2.5% was “still achievable,” but cautioned that a severe cut in Russian gas supplies to France could threaten this outlook.

"We have to anticipate the possibility of a complete cut-off of Russian gas exports to France, combined with a harsh winter (as a possible scenario among others)," he said.