- Prior 49.6
- Composite PMI 48.8 vs 48.3 prelim
- Prior 49.9
The readings might be revised higher in the final report but they are still much softer than in February. A sharper decline in new business weighed on business activity with the war in the Middle East also reportedly hit order books. As such, it is once again demand-side weakness that is plaguing French services activity as we wrap up Q1.
Besides that, the most prominent impact of the US-Iran conflict was on prices as input cost inflation rose to a 20-month high. Ouch.
HCOB notes that:
“The resolution of the budget deadlock earlier this year has failed to provide France’s economy with a springboard into higher growth during the first quarter, according to the latest PMI numbers. That said, the local elections in March provided yet another political event for businesses to contend with, so we may need to wait until April data to make concrete conclusions. The outbreak of war in the Middle East is also being felt in Europe, with survey respondents reporting a hit to demand due to the conflict.
“However, prices were where the Middle East war showed up most starkly in the March PMI figures. Input price inflation accelerated sharply, hitting its highest level since July 2024 as the oil price shock drove fuel costs up across France.
“Much uncertainty lies ahead, a condition which French businesses have become rather accustomed to in recent years given the domestic political environment. Uncertainty is bad for growth, and the inflation impulse stemming from the war raises the risk of stagflation in France.”
This article was written by Justin Low at investinglive.com.