French Private Sector Activity Contracts Again Amid Economic Uncertainty
July 2025 sees continued contraction in France's private sector activity, diverging from Eurozone growth.
Key Points
- • Private sector activity in France contracted for the 11th month in July 2025.
- • The French economy is projected to grow by only 0.6% in 2025, down from 1.1% in 2024.
- • France's manufacturing sector continues to lag behind Eurozone peers, impacting overall performance.
- • The Eurozone reported its strongest private sector growth since August 2024, with a PMI index of 51.
France's private sector activity experienced a contraction in July 2025, marking the eleventh consecutive month of decline according to the PMI Flash index from S&P Global. This contraction, although less severe than in previous months, underscores growing concerns among businesses in both manufacturing and services sectors due to ongoing budget cuts and bleak sales forecasts.
The PMI index dropped significantly, reflecting a notable fall in optimism among French manufacturers and service providers. Stagnant production levels and ongoing political uncertainties have contributed to a sense of pessimism, resulting in a projected economic growth of only 0.6% for 2025, a decrease from 1.1% in 2024. This forecast comes amidst declining confidence influenced by tightening budgetary constraints and global economic challenges.
Contrastingly, the Eurozone has shown resilience, achieving its highest private sector growth since August 2024, with the PMI index rising to 51 in July from 50.6 in June. The service sector in the Eurozone has particularly thrived, reaching its fastest growth rate since January. While manufacturing in the Eurozone is witnessing some upward movement, with countries like Germany leading this growth, France’s manufacturing sector remains weak, adversely affecting its overall economic performance.
Cyrus de la Rubia, an economist with HCOB, remarked on the situation, stating that while Germany and many other Eurozone nations drive moderate growth in manufacturing, France seems to be on a trajectory towards slight contraction. This stark contrast between France's economic landscape and that of the broader Eurozone highlights the pressing challenges facing the French economy.