France’s services sector recorded its fastest contraction since May in October, adding to concerns about the country’s economic outlook. A new business survey showed that activity weakened as protests, uncertainty and lower customer demand affected companies across the country.
The S&P Global France Services Business Activity Index fell to 46.2 in October from 51.2 in September. A reading above 50 indicates growth, while a figure below that level signals a decline. The latest result therefore points to a clear slowdown in activity.
The final figure was also weaker than the preliminary estimate of 48.4. This suggests that conditions in the service sector were worse than businesses and analysts had first expected.
The wider economy also showed signs of pressure. The composite index, which measures activity in both services and manufacturing, dropped to 46.6 from 51.1. It also recorded its sharpest decline since May.
Protests and social unrest were among the factors affecting business activity. The demonstrations contributed to weaker domestic demand, while uncertainty encouraged some customers and companies to delay spending decisions. Businesses also faced pressure from rising government bond yields.
Joe Hayes, a senior economist at S&P Global Market Intelligence, said domestic demand and investment activity had stalled during October. He also noted that new business and overall service activity fell at their fastest rates since May.
The service sector is an important part of the French economy. It includes areas such as transport, tourism, retail, finance, hospitality and professional services. A decline in this sector can affect employment, company investment and household spending.
Consumer confidence has also weakened. Earlier official data showed that confidence had fallen to its lowest level since June 2013. Demonstrations and wider uncertainty were among the factors linked to the decline.
Lower confidence can make households more careful with their money. People may delay major purchases, reduce spending on leisure or choose cheaper services. Businesses can respond by limiting investment and reviewing hiring plans.
The latest figures add pressure on the French government as it seeks to support economic activity and manage public finances. Companies will be watching whether demand improves in the coming months and whether political uncertainty becomes less disruptive.
The survey does not mean that every French business is facing a decline. However, the fall in both services and composite activity shows that the slowdown is broad enough to attract attention. Future data will help show whether October was a short-term setback or the start of a longer period of weaker growth.
