French service sector growth remains elevated in July
Staff Writer |
Growth momentum was sustained in the French service sector at the start of the third quarter, with output and new orders continuing to rise at historically elevated rates, despite softening slightly from June.
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Robust increases in client demand led to a further accumulation of unfinished business, in spite of another strong round of staff hiring.
Meanwhile, input price inflation softened from June’s recent high but remained sharp nonetheless, which in turn contributed to another slight rise in average selling prices.
The headline seasonally adjusted IHS Markit France Services Business Activity Index registered 54.9 in July, down from June’s 55.9.
The rate of expansion, however, remained marked overall.
Output growth was driven by the Post & Telecommunications sub-sector, followed by Transport & Storage companies.
Buoyant economic conditions and higher client demand were cited by panellists as factors supporting growth.
Meanwhile, the seasonally adjusted IHS Markit France Composite Output Index, a GDPweighted average of the Manufacturing Output Index and the Services Business Activity Index dipped from 55.0 in June to 54.4 in July.
The slower rise in service sector activity more than offset a sharper expansion in manufacturing production.
The rate of composite output growth remained solid and above the long-run series average, but was the second weakest recorded for a year-and-a-half.
In line with the trend for business activity, the amount of new orders placed with French service providers rose during July, albeit at a softer rate than in June.
Transport & Storage remained the best performing over the month, followed by Hotels & Restaurants, while Other Services was the only monitored sub-sector not to record and increase.
Stronger client demand encouraged firms to take on additional staff members for the nineteenth time in as many months.
The rate of job creation remained marked and above the long-run series average.
Staffing numbers rose to the greatest extent in the Post & Telecommunications subsector.
Despite the increase, backlogs of unfinished work continued to rise in July.
Moreover, the rate of accumulation was broadly unchanged from June and marked overall.
Business confidence with regard to activity growth over the coming 12 months remained positive in July.
Indeed, the degree of positive sentiment improved from June and remained marked overall amid reports of strong sales forecasts.
On the price front, French service providers recorded a further rise in average cost burdens during July.
The rate of inflation eased slightly from June’s near seven-year peak but remained marked nonetheless amid reports of higher fuel and transportation costs.
The increase was broadbased across each of the six monitored subsectors, led by Transport & Storage firms.
In response, some firms hiked their average selling prices. ■