French Service Sector Contracts Amid Middle East Conflict and Political Caution

On April 7, Jin10 reported that a commercial survey indicates a further contraction in France's service sector in March, attributed to weakened customer spending due to the Middle East conflict and corporate caution ahead of local elections. According to S&P Global, the final PMI for France's service sector fell to 48.8 in March from 49.6 in February, slightly improving from the preliminary figure of 48.3. The composite PMI also declined to 48.8 from 49.9 in February. S&P Global noted this marks the fastest decline in private sector business activity since October last year. The firm added that the ongoing U.S.-Israel conflict with Iran is impacting French businesses, affecting inflation and causing delays in customer orders and investments. Joe Hayes, Chief Economist at S&P Global Market Intelligence, stated, "There is significant uncertainty ahead, and given the domestic political environment, French businesses have become quite accustomed to this situation in recent years. Uncertainty hampers growth, and the inflation shock from the conflict increases the risk of stagflation in France."