France services activity contracts faster in August on weaker demand, PMI shows

A waiter waits for customers at La Mere Catherine, Place du Tertre at Montmartre in Paris, France, June 2, 2020. REUTERS

PARIS, Sept 3 (Reuters) – France’s services sector contracted more than expected in August, as weaker demand and extreme heat weighed on sales and ​inflationary pressure crept back up, a business survey showed ‌on Thursday.

• The S&P Global France Final Services PMI for August declined to 48.0 points from 49.6 in July. A figure below 50 points shows ​a contraction in activity while above 50 shows an expansion.
• The ​final reading was slightly lower than the flash services ⁠figure of 48.4.
• New business fell after July’s marginal gain, marking ​the eighth deterioration in the past nine months. Sales to international ​clients declined at the fastest pace since May.
• Backlogs of work fell at the sharpest pace in four months, extending the current decline to 12 months. ​Employment also fell for a fourth straight month, though the ​pace of job shedding eased.
• Price pressures picked up in August. Charges rose at ‌the ⁠fastest pace in three months, while input cost inflation increased for the first time since May, with fuel frequently cited as a source of pressure.
• The August final composite PMI — which includes both ​the services and ​the manufacturing sectors — ⁠declined to 48.5 points from 49.4 in July, also coming in slightly below a flash August ​composite PMI figure of 48.8.
• “We should perhaps discount ​the August ⁠numbers somewhat, given the extreme heat seen this summer,” said Joe Hayes, senior economist at S&P Global Market Intelligence.
• “Nevertheless, the outlook remains ⁠a ​challenged one for France. With the 2027 ​election period looming, companies remain cautious towards the year-ahead, with confidence well below its ​long-term average,” he said.

Reporting by Dominique Vidalon; Editing by Hugh Lawson