• July final services PMI 49.6 vs 49.8 prelim
• Prior 46.8
• July final composite PMI 49.4 vs 49.6 prelim
• Prior 47.2

After a struggling second quarter, the start of the third quarter is at least seen looking better for the French economy. New business volumes rose for the first time since November last year, with greater business confidence observed alongside easing cost pressures. It’s still not great with overall business activity pointing to a mild contraction but it at least is an improvement to how conditions were in the months before.

The rebound in new orders was largely domestic-driven though amid a further and sharper drop in new business from abroad. Meanwhile, French service providers also recorded a faster reduction in employment levels in July. So, it’s not exactly all rosy with the report here.

But looking at the positives, there was a rise in business confidence although the level of positivity was historically subdued amid concerns about the political environment and higher interest rates. Besides that, at least there was another easing in the rate of input cost inflation. The increase in July was the weakest in five months, albeit still sharp.

S&P Global notes that:

“The third quarter has started off comparatively well for France’s economy. The composite index for July is at a level historically consistent with quarterly GDP growth of around 0.2-0.3%. This amounts to a rebound after a weak second quarter of PMI data.

“Tailwinds came in the form of a demand pick-up, easing inflation and improved confidence, but given the rise in global energy prices at the end of last month and the intensification of the Middle East war, there’s a high risk that July’s positive PMI trend reverses.”

This article was written by Justin Low at investinglive.com.