French services contract for 9th month in May ’25

France’s service sector contracted for the ninth consecutive month in May, though at the slowest pace so far this year, the latest HCOB France Services PMI showed. The headline index rose to 48.9 from April’s 47.3, indicating a softer but sustained downturn in business activity amid continued weakness in domestic demand.

New business and backlogs declined again, as firms reported budget constraints and client hesitancy. Export orders also fell, but at a slower rate than domestic sales. Employment cuts continued, though marginally, marking the sixth straight month of staff reductions.

Despite stronger input cost inflation driven by wages and purchases, service providers slashed selling prices at the fastest rate since February 2021 to boost demand. Business expectations deteriorated sharply, with sentiment dropping to a five-year low due to geopolitical uncertainty and weak economic prospects.

The HCOB France Composite PMI Output Index climbed to 49.3, its highest in 2024, signalling a near-stabilisation in private sector activity. However, confidence and pricing pressures remain major challenges across the French economy.

Attribution: Amwal Al Ghad English
Subediting: M. S. Salama