France: Services PMI rises in July
The HCOB France Services Purchasing Managers’ Index (PMI) improved to 50.1 in July from 48.8 last month. As a result, the index moved above the 50.0 no-change threshold, and signaled an improvement in services-sector business activity compared to the previous month.
The increase in July’s PMI was attributed to a combination of factors including the boost from the Olympic Games and the end of the election period. Employment continued to grow in the month, extending the job creation streak to over three-and-a-half years, while output broadly stabilized after two straight months of decline. However, there was a fall in new business, particularly from international clients.
In July, input prices rose at the quickest pace for three months, largely due to salary increases. In response, output charges were lifted as firms sought to protect their margins. Meanwhile, business confidence slipped for a fourth consecutive month to a year-to-date low, influenced by expectations over softening demand following the end of the Olympic Games.
Norman Liebke, economist at Hamburg at Hamburg Commercial Bank, said:
“The Olympic Games are boosting the French economy. According to anecdotal evidence, there are companies for which the Olympic Games are generating unusually high business activity in July. This does, however, mean that business activity might drop in September when the Olympic Games are over.”