FX.co ★ France Services Sector Contracts at Slower Pace

The HCOB France Services PMI increased to 48.9 in May 2025, up from 47.3 in April, surpassing the preliminary forecast of 47.4. This represents the ninth consecutive month of contraction within the services sector, although the rate of decline has eased to its lowest this year. This softer downturn is attributed to less pronounced decreases in both new business and employment; however, demand remains weak, particularly in the domestic market. To boost sales, companies reduced prices at the swiftest pace since February 2021, notwithstanding a slight uptick in input cost inflation driven by wages and purchasing expenses. Furthermore, employment experienced a marginal decline as companies tried to reduce costs amidst restrained growth prospects. Meanwhile, business confidence sharply declined, with future expectations reaching a five-year low due to geopolitical concerns and economic unpredictability. Firms surveyed cited client hesitancy and budgetary constraints as significant impediments to activity.