Konjunktur: Frankreichs Wirtschaft schrumpft überraschend – Unruhen und Zinshoch belasten

The French economy surprised with a notable contraction in October, according to the purchasing managers' index for the private sector, including both industry and services, which fell to 48.4 points from 51.1 in September. S&P Global's financial services reported this on Friday. The index is below the 50 mark, indicating a shrinking economy. Economists surveyed by Reuters had only expected a decline to 50.5 points.

S&P Global Market Intelligence economist Joe Hayes said the economic recovery in September proved short-lived. "The rebound in October is hardly surprising given the rapidly worsening financial conditions and mounting political pressure across France." Nationwide protests against soaring living costs erupted over the weekend, resulting in street battles and looting.

Demonstrations are planned for this Saturday by student organizations and members of the Yellow Vest movement. Additionally, a household budget crisis has emerged, with the yield on French government bonds with a ten-year maturity rising above the five percent mark, its highest level in 24 years. This stems from the struggling government's attempt to pass a budget through Parliament and reduce the high deficit.

The uncertainty ahead of a fiercely contested presidential election in the coming year further weighs on the economy. Both the purchasing managers' index for services and the one for industry fell below the growth threshold of 50. Hayes stated that the October numbers could be a preview of what's to come. The sentiment indicator, which measures companies' expectations for the next twelve months, has hit a six-year low.

This reflects concerns about the highly uncertain presidential election in 2027, compounded by the already existing worries about France's fiscal situation.