PARIS, April 7 (Reuters) – France’s services sector contracted further in March as client spending weakened due to the war in the Middle East and caution among businesses in the run-up to last month’s local elections, a business survey showed on Tuesday.
S&P Global said the final services PMI for March fell to 48.8 points from 49.6 points in February, marking a slight improvement from the flash March services figure of 48.3 points.
Any reading below 50 points to a contraction in activity, while above that indicates expansion.
The final March composite PMI – which includes both the services and manufacturing sectors – also came in at 48.8, down from 49.9 in February. S&P Global said this marked the quickest drop in private sector business activity since October.
S&P Global added that the U.S.-Israeli war on Iran was impacting French businesses both in terms of inflation and customers postponing orders or delaying investments.
“Much uncertainty lies ahead, a condition which French businesses have become rather accustomed to in recent years given the domestic political environment. Uncertainty is bad for growth, and the inflation impulse stemming from the war raises the risk of stagflation in France,” said Joe Hayes, principal economist at S&P Global Market Intelligence.
(Reporting by Sudip Kar-Gupta; Editing by Hugh Lawson)
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