Political Uncertainty Hits France's Services Sector

By Sudip Kar-Gupta

PARIS (Reuters) – Political uncertainty in France impacted the country's services sector, as indicated by a monthly survey on Wednesday. The risks surrounding Prime Minister Michel Barnier's government potentially collapsing have weighed heavily on the euro zone's second-largest economy.

The HCOB France services final PMI fell to 46.9 in November from 49.2 in October. A figure below 50 signifies a contraction in activity; however, this final reading was above November's flash services PMI of 45.7 points.

The final composite PMI, which includes both services and manufacturing, decreased to 45.9 points in November, down from 48.1 in October.

France's services sector has seen declines for three consecutive months, following a temporary increase in business activity during the summer months, attributed partly to the Olympics, which has now dissipated amid rising political concerns.

Tariq Kamal Chaudhry, an economist at Hamburg Commercial Bank, noted, "The positive signals from the HCOB PMI for the French service sector seen over the summer are now a thing of the past."

In November, French business confidence plummeted to its lowest level in over four years, according to the survey.

Chaudhry added, "This shows how fragile business sentiment is against the backdrop of further political uncertainty should Michel Barnier's minority government collapse over the budget deadlock."