France private sector returns to growth at fastest rate in 25 months, PMI shows

France's private sector experienced its fastest growth in over two years in September, according to a business survey released on Wednesday. The S&P Global Flash France Composite Output Index rose to 51.2 from 48.5 in August, indicating expansion. Joe Hayes, Senior Principal Economist at S&P Global Market Intelligence, noted that the economy displayed surprising resilience, though the sustainability of this growth is unclear due to modest new orders and declining firms' expectations.

Services drove the majority of the momentum, with the Flash France Services PMI Business Activity Index hitting a 10-month high of 51.4, up from 48.0. Manufacturing output growth slowed and remained modest. Demand improved slightly, with new orders rising for the first time in 10 months and foreign business orders contracting the weakest of the year.

Companies continued to lay off staff for the fifth consecutive month, citing redundancies, resignations, and non-renewal of temporary contracts. Additionally, input costs and output charges surged to their highest levels since May, driven by increased fuel, energy, metals, and component prices. Despite these challenges, business expectations worsened, making French companies the least optimistic about the year ahead since May 2022, as rising interest rates, political uncertainty, and international competition dampened confidence.