French Services Sector Faces Challenges in January

In a recent report released by S&P Global and Hamburg Commercial Bank (HCOB), the French services sector experienced a contraction, with the HCOB Flash France Services PMI Business Activity Index dropping to 48.9 in January from 49.3 in December. This marks a two-month low, indicating a challenging start to the year for the sector.

Manufacturing Sector Shows Signs of Recovery

Contrasting the services sector, the manufacturing sector showed promising signs of recovery. The HCOB Flash France Manufacturing PMI Output Index rose to 45.0, reaching a seven-month high from December's 39.2. This improvement contributed to a rise in the composite PMI to 48.3, the highest in four months, although it still remains below the 50 threshold that indicates growth.

Economist's Insight on the Current Economic State

Dr. Tariq Kamal Chaudhry, an economist at Hamburg Commercial Bank, commented on the situation, stating, "France's economy disappoints at the start of 2025. The Flash Composite HCOB PMI for January suggested that the French economy contracted again. The latest decline in private sector economic activity was slightly weaker than in the previous month, thanks to the manufacturing sector, which recorded the smallest production drop since mid-2024."