France troubles growing with concerning PMI for services:
GDP growth finally came in at zero in Q2 and –0.2% in Q1, both revised down by INSEE. The government’s +0.7% full-year target is now out of reach.
September’s services PMI rebound to 51.2 proved fleeting. October’s flash dropped back to 48.4 (composite and services), manufacturing at 49.3. Manufacturing new orders collapsed to 44.9, employment fell for a sixth straight month, and business confidence hit a six-and-a-half-year low (2027 election and fiscal worries). Political and financial conditions tightened further.July’s services PMI (49.6) already pointed to barely positive Q3 growth. Banque de France and INSEE still see +0.1% q/q for Q3. But without a rebound, the Q4 average would settle in the 47–48 zone.Without a rebound in new orders and employment, services cannot take over.
With services PMI stuck in the 47–48 range, Q4 should come in between –0.2% and –0.4% q/q.
That would push full-year 2026 into a mild recession (around –0.1% to –0.2%), rather than mere stagnation. This is our scenario.
Revised ranges:
- Q3 2026: +0.1% q/q
- Q4 2026: –0.2% to –0.4% q/q
- Full-year 2026: –0.1% to –0.2%
September inflation (CPI 3.1%, HICP 3.4%), driven by energy at 21.3%, is further squeezing real incomes. Services account for ~79–80% of French value added (vs 73.7% in the EU): the services PMI is therefore decisive.
Without a rebound, 2026 ends in a mild recession.