FRENCH FLASH MANUFACTURING PMI FELL TO 44.5 POINTS IN OCTOBER (SEPTEMBER FINAL 44.6, FORECAST 44.9)
PARIS, Oct 24 (Reuters) -France's dominant services sector contracted at its sharpest rate in seven months in October, dragged down by sluggish new orders, a survey of company executives showed on Thursday.
The darkening of the business sentiment in the euro zone's second-biggest economy comes as the European Central Bank deliberates the pace of future interest rate cuts after lowering rates this month for the third time this year.
The HCOB Flash France Services PMI Business Activity Index, compiled by S&P Global, fell to 48.3 in October from 49.6 in September, well below the reading of 49.9 expected by economists polled by Reuters. Any reading below 50 indicates contraction.
The broader French economy also showed signs of strain, with a composite PMI index, combining services and factory activity, falling to a nine-month low of 47.3 from 48.6 in September.
Manufacturing continued to struggle, with the output index declining to a nine-month low of 42.5 from 44.0. A sub-index on the business outlook was the most pessimistic since May 2020.
Both sectors reported a significant drop in new orders, particularly from export markets, while France's uncertain political situation also weighed on executives' mood.
"Prime Minister Michel Barnier is facing a fragile political situation, and the 2025 budget remains unresolved, further undermining business confidence," said Tariq Kamal Chaudhry, economist at Hamburg Commercial Bank.
Reporting by Tassilo Hummel
Editing by Christina Fincher
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