France's PMI Shows Slight Improvement, But Contraction Persists

France's March PMI preliminary values for both the services and manufacturing sectors showed signs of improvement but remained in contraction territory. The services sector PMI initial value rose to 46.6 points from 45.3 points in February, exceeding market expectations of 46.3 points. Similarly, the manufacturing sector PMI initial value increased to 48.9 points from 45.8 points, surpassing the expected 46.5 points. However, both indices remained below the crucial 50-point threshold, indicating ongoing contraction in both sectors.

The composite PMI for March, which combines both services and manufacturing, rose to 47.0 points from 45.1 points the previous month. This marks the seventh consecutive month of contraction, highlighting the persistent economic slowdown in France. The data reflects a continued lack of confidence among French businesses, with expectations for business activity over the next 12 months being further downgraded. This pessimism has reached its lowest level in nearly five years, according to the report.

Despite the slight improvement in PMI values, the overall economic momentum in France remains weak. The French economy is struggling to find growth drivers, and while the recent legislative progress, such as the approval of the delayed 2025 budget bill, has averted a potential credit rating downgrade, the future economic policy remains highly uncertain. This uncertainty is likely to continue to dampen business confidence and economic activity in the coming months.

Economic analysts point out that the French economy is facing significant challenges, with both the services and manufacturing sectors showing signs of strain. The slight improvement in PMI values is a positive development, but it is not sufficient to counteract the broader economic headwinds. Policymakers and the government will need to implement additional measures to support economic growth and restore business confidence if they aim to achieve a sustained recovery in the near future.