France services PMI points to modest rate of growth in October, slowest in three months

Growth in French services sector weakened during the month of October, pointing to a modest rate of growth during the period, the slowest in three months. Concurrently, input cost inflation eased slightly, while average selling prices continued to decline at a solid pace. Business expectations remained positive during the month.

The seasonally adjusted headline Markit France Business Activity Index posted 51.4 in October. Down from 53.3 in September, the latest index reading pointed to a modest rate of growth that was the slowest in three months. Further, the final seasonally adjusted Markit France Composite Output Index, which covers the combined manufacturing and service sectors fell to 51.6 in October from 52.7 in September, and signalled the lowest rate of growth in three months.

The rise in new orders contributed to an eighth successive monthly expansion in the level of outstanding business during October. Moreover, the rate of backlog accumulation accelerated from September to the sharpest recorded in 16 months.

Meanwhile, input prices facing companies operating in the French service sector rose for the eighty- second consecutive month in October, amid reports of rising employment costs. The rate of cost inflation remained modest and broadly in line with last month’s trend. At the composite level, input prices rose again in October and at the sharpest rate in five months.

"Business expectations remained strong, suggesting companies are hopeful conditions will continue to improve in the months ahead," said Alex Gill, Economist, IHS Markit.