In January 2025, private sector business activity in France continued its contraction for the fifth consecutive month.
Private Sector Activity in France Continues Decline in January
In January 2025, private sector business activity in France continued its contraction for the fifth consecutive month, according to the latest HCOB ‘flash’ PMI® data from S&P Global. The decline in output was due to weaker order intakes, leading to a reduction in business activity across both manufacturing and services. However, the rate of decline softened, signaling some improvement in market conditions and increased client interest in certain sectors. As a result, the overall pace of contraction was the slowest since September 2024.
Private Sector Activity in France Continues Decline in January
Despite this moderation, business confidence fell to a neutral stance, down from slight optimism in December. Companies expressed concerns about the near-term outlook, leading to the fastest pace of job cuts since October 2020. Interestingly, prices for goods and services saw a reduction for the first time in almost four years, despite ongoing cost pressures.
The HCOB Flash France Composite PMI Output Index remained below the 50.0 mark for the fifth month in a row, indicating a sustained decrease in private-sector business activity. However, it rose to 48.3 from 47.5 in December, signaling a further softening in the contraction rate. This improvement was by the manufacturing sector, which experienced its smallest drop in production since mid-2024. In contrast, services activity saw a marginally quicker decline.
Overall, the slower decline in business activity was due to weaker demand, with new orders falling for the eighth consecutive month. Nevertheless, the rate of decline in new business softened compared to previous months. Employment across the private sector also fell at its fastest pace in over four years, largely due to the expiration of temporary contracts and voluntary departures, reflecting ongoing challenges in the labor market.
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