French Services Sector Returns to Expansion Amid Fragile Demand

Note: This section contains information in English only.
Source: Dukascopy Bank SA
France's service sector returned to growth in September 2026, with the headline S&P Global France Services Business Activity Index rising from 48.0 in August to 51.2, marking the first expansion of the year. The broader private sector followed suit as the Composite PMI Output Index hit a 25-month high of 51.1. However, underlying demand conditions remained fragile; overall new business contracted marginally, dragged down by economic uncertainty, while export orders dropped for a fourteenth straight month. Employment also fell for a fifth consecutive month due to company restructurings, though the pace of job cuts softened to a marginal rate while backlogs of work ticked up slightly.



Intensifying cost pressures emerged as a major concern, driven by higher expenses for fuel, computer hardware, and raw materials. To counter margin compression, services firms demonstrated pricing power by hiking prices charged at the fastest pace in over three years. Despite current activity picking up, 12-month business optimism slipped to its lowest level since May, weighed down by higher interest rates, subdued client confidence, and the upcoming election period. S&P Global noted that the rebound's longevity remains uncertain, partly reflecting potential payback after August's heatwave disruptions alongside heightened risks of energy-driven inflation pass-through.

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