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Figure Heloc Prior 49.6Composite PMI 48.8 vs 48.3 prelimPrior 49.9The readings might be revised higher in the final report but they are still much softer than in February. A sharper decline in new business weighed on business activity with the war in the
Middle East also reportedly hit order books. As such, it is once again demand-side weakness that is plaguing French services activity as we wrap up Q1.Besides that, the
most prominent impact of the US-Iran conflict was on prices as input
cost inflation rose to a 20-month high. Ouch.HCOB notes that:”The resolution of the budget deadlock earlier this
year has failed to provide France’s economy with a
springboard into higher growth during the first quarter,
according to the latest PMI numbers. That said, the
local elections in March provided yet another political
event for businesses to contend with, so we may need
to wait until April data to make concrete conclusions.
The outbreak of war in the Middle East is also being felt
in Europe, with survey respondents reporting a hit to
demand due to the conflict.
“However, prices were where the Middle East war
showed up most starkly in the March PMI figures. Input
price inflation accelerated sharply, hitting its highest
level since July 2024 as the oil price shock drove fuel
costs up across France.
“Much uncertainty lies ahead, a condition which French
businesses have become rather accustomed to in
recent years given the domestic political environment.
Uncertainty is bad for growth, and the inflation impulse
stemming from the war raises the risk of stagflation in
France.”
This article was written by Justin Low at investinglive.com.
💡 DMK Insight
The latest PMI readings are a red flag for traders: softer business activity signals potential economic slowdown. With the Composite PMI at 48.8, down from 49.6, this indicates contraction in the sector, which could lead to reduced consumer spending and lower corporate earnings. The geopolitical tensions in the Middle East are adding to the uncertainty, impacting order books and overall market sentiment. Traders should keep an eye on how this affects related assets, particularly in the forex market where currencies tied to economic performance may weaken. If the final PMI report revises these numbers lower, we could see further volatility in equities and commodities. Here’s the thing: while some might brush this off as a temporary dip, the trend suggests a more cautious approach is warranted. Watch for key support levels in major indices; if they break, it could trigger a wave of selling. Keep an eye on the upcoming economic indicators and how they correlate with these PMI figures to gauge market direction.
📮 Takeaway
Monitor the Composite PMI closely; a further decline could signal broader economic issues, impacting equities and forex markets significantly.
