French services sector returns to growth in November after 14-month decline

Investing.com -- France’s service sector returned to growth in November for the first time since August 2024, according to the latest HCOB PMI survey.

The HCOB France Services PMI Business Activity Index rose to a 15-month high of 51.4 in November, up from 48.0 in October, crossing above the 50.0 threshold that separates growth from contraction.

This marked the end of 14 consecutive months of declining business activity in the French services sector. The improvement was driven by a fresh increase in new business, the first expansion since August 2024, as demand improved from both new and existing customers.

New export business also showed improvement, with inflows from non-domestic clients stabilizing after several months of solid contractions.

Despite the positive activity data, other indicators remained subdued. Employment in the service sector fell for the first time since July, though only slightly, with companies citing resignations and lower fixed-term contract numbers.

Business expectations remained weak by historical standards, despite some optimism about future client growth, new product launches, and hiring plans.

Pricing power was constrained by competitive pressures, with output prices virtually unchanged despite accelerating input cost inflation. Companies reported higher costs for salaries, energy, and raw materials.

The broader HCOB France Composite PMI Output Index, which measures both manufacturing and services, registered 50.4 in November, up from 47.7 in October, indicating the first expansion in private sector output since August 2024.

However, manufacturing remained a drag on overall performance, with output in that sector falling at the fastest pace in nine months.

"The improvement in services is encouraging, yet it remains to be seen whether this is just a one-off uptick or the start of a sustained recovery," said Jonas Feldhusen, Junior Economist at Hamburg Commercial Bank.

"If the government manages to reach a budget compromise and reduce political uncertainty, household consumption and business investment could benefit from a more stable policy environment."

The survey data was collected between November 12-25.

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