PARIS, Jan 23 (Reuters) - French business activity unexpectedly contracted in January, after two months of meagre growth, according to a survey published Friday, as a sharp drop in demand for services
outweighed rising output in the manufacturing sector.
The HCOB France flash purchasing managers index (PMI) for the country's dominant services sector, compiled by S&P Global, came in at 47.9 points in January, a three-month low.
The index fell again below the 50 points threshold separating growth from contraction, where it has been for ten of the last 12 months. A Reuters poll forecast for the January flash services PMI stood at 50.5 and the final December figure was at 50.1.
The flash manufacturing PMI for this month reached 51.0 points - a 43-month high - from 50.7 in December - and above a Reuters poll forecast for a figure of 50.5 points.
The flash January composite PMI - which comprises both the services and manufacturing sectors - slipped to 48.6 points from 50.0 in December, and well below a forecast for a figure of 50.0 points.
"The French private sector entered the new year on a muted note. The HCOB Flash PMIs point to a broad-based softening in export conditions, reflecting continued uncertainty on the trade policy front despite prior trade agreements," said Hamburg Commercial Bank economist Jonas Feldhusen.
"Nonetheless, the HCOB flash PMIs showed a modest improvement in manufacturing, whereas activity in the services sector weakened notably at the start of the year. The prospect of a resolution over the 2026 national budget offers some relief, as it reduces the risk of a renewed political crisis in the near term," he said.
French Prime Minister Sebastien Lecornu earlier this week used a special constitutional power to force part of his 2026 budget bill through the deeply divided lower house of parliament without a vote, bringing France closer to getting a 2026 budget.
Last month, the INSEE national statistics agency forecast France's economy, the euro zone's second-largest, to post moderate growth in early 2026, with resilient household spending offsetting weaker foreign trade.
(Reporting by Benoit Van Overstraeten; Editing by Toby Chopra)
