France July final services PMI 47.1 vs 47.4 prelim

<ul><li>Prior 48.0</li><li>Composite PMI 46.6 vs 46.6 prelim</li><li>Prior 47.2</li></ul><p>This just confirms a further slump in the French services sector in July and a contraction in the economy as well. A lack of new business isn't an encouraging sign as that means the outlook is likely to remain more challenging in Q3 and talks of a recession will start to come back into the picture. HCOB notes that:</p><p>“The French service sector is falling further behind as activity dropped for the second month in a row in July. At the same
time there is a lack of new business, especially from abroad, which does not bode well for the performance of service
companies over the next few months.
</p><p>“The French service sector is not falling off a cliff, however, as businesses are still hiring and they are able to pass through
higher input costs like salaries to their customers. The volume of outstanding business has even shown a small uptick in
July, so there is still some work available to be done. Nevertheless, the indicators are losing momentum and there is no
evidence to suggest a quick recovery is on the cards.
</p><p>“According to our nowcast model, which considers the PMI, we will see an outright shrinkage of the services sector in the
third quarter. Putting this into perspective, official figures suggest that the service sector was broadly stagnant at the turn of
the year but we saw somewhat of a recovery in the second quarter. Now, it looks as if the sector has lost its footing again.
</p><p>“It’s striking that the performance of the French service sector is so much worse than that of its main peer, Germany. This
may have to do with the aftermath of the protests and strikes in France in connection with the ill-received pension reform.”</p>

This article was written by Justin Low at www.forexlive.com.