French business growth weakens by more than forecast in January – flash PMI
French business growth dipped by more than forecast in January compared to December, according to initial estimates in a monthly survey, as the impact of COVID-19 and inflationary pressures weighed on activity.
Data compiler IHS Markit said its flash purchasing managers’ index (PMI) for France’s dominant services sector fell to 53.1 points in January from 57.0 in December – below a forecast for a January reading of 55.3 points.
The reading for the services sector, however, remained above the 50-point threshold which marks an expansion in activity.
The January flash PMI reading for French manufacturing dipped to 55.5 points from 55.6, albeit in line with forecasts.
The January composite flash PMI, which includes both the services and manufacturing sectors, fell to 52.7 points from 55.8 in December – coming below a forecast for 54.5 points.
IHS Markit said the figures highlighted the hits to business caused by the fifth wave of the COVID virus currently hitting the country, and inflationary pressures caused by rising energy prices.
“Given the surging number of daily COVID-19 cases we’ve seen in France, it’s no surprise to see softer PMI numbers in January,” said IHS Markit senior economist Joe Hayes.
“Supply chain issues continue to impact the economy, particularly manufacturers, but we do appear to have seen the worst as delivery times lengthened to a far weaker extent than seen during much of 2021. That being said, the inflationary side effects remain in play and are being exacerbated by rising staff costs and energy prices,” added Hayes.
Source: Reuters (Reporting by Sudip Kar-Gupta; Editing by Toby Chopra)