The French private sector witnessed a marked decline in April 2025, as the Composite Purchasing Managers’ Index (PMI) from the HCOB showed a decline in economic activity for the eighth consecutive month. The index registered 47.3 points, indicating a continued contraction in the eurozone’s second-largest economy.
These results were primarily affected by a decline in the services sector, which fell to 46.8 points, its lowest level in two months, reflecting a sharp decline in new business. In contrast, the manufacturing sector showed some improvement, with the production index rising to 50.3 points, its highest level in 35 months, although the overall manufacturing index fell to 48.2 points.
New orders declined significantly, especially in domestic markets, leading to a decline in sales volume. However, exports saw their smallest decline since August 2022, supported by orders from Africa and some regions of Europe. The decline in business volume led to companies completing backlogs of orders, with arrears in the manufacturing sector settling for the first time in more than two years. Input cost inflation also slowed to its slowest rate in 2025, and output prices were cut for the first time in three months.
Business confidence in the future declined, with expectations reaching their lowest level in nearly five years. This indicates growing concern about future economic conditions.
Despite these challenges, the data were not as negative as some analysts had feared, suggesting that the French economy still retains some resilience in the face of pressure.
These results highlight the need for supportive economic policies to boost domestic demand and stimulate private sector growth. The final PMI results for April are expected in early May, which will provide a clearer view of future economic trends in France.
French Private Sector Activity Continues to Deteriorate in April 2025
French companies recorded a further decline in private sector activity in April 2025. The Composite Purchasing Managers’ Index (PMI) from the HCOB fell to 47.3, compared to 48.0 in March. This decline confirms the eighth consecutive month of contraction, reflecting further weakness in domestic demand.
The report indicated a sharp decline in new business, particularly in domestic markets. This decline contributed to a broader slowdown in activity. Business expectations also fell to their lowest level since May 2020, reflecting growing concern among companies about the future of the French economy.
According to preliminary data from S&P Global, there are no signs of an imminent improvement. However, manufacturing indicators continue to show marginally stable output levels compared to previous months.
Weak Domestic Demand Drives Economic Contraction in France
Data showed that weak demand is the primary driver of this slowdown. Companies reported that domestic demand declined sharply, negatively impacting new orders. In contrast, a limited number of exporters reported a slight improvement in demand from Africa and some parts of Europe.
The contraction was not limited to the manufacturing sector. The services sector also saw a significant decline in new business volume. Services firms reported a sharp decline not seen since November 2020. Many companies attributed this decline to weak consumer confidence and concerns about rising prices.
Although some indicators remained stable, the outlook for activity remains bleak. Many participants expect the contraction to continue in the coming months.
Employment and Prices: Mixed Signals from French Companies
Despite the contraction, the labor market has not yet seen dramatic changes. Data showed that hiring in April remained unchanged, as some firms refrained from replacing departing employees or renewing temporary contracts. However, the deteriorating outlook may prompt companies to take more conservative steps in the coming months.
Analysts’ Comment: The French Situation Remains Fragile
On the price front, April data showed signs of slowing inflation. Companies reported slower growth in input prices, the weakest since December 2024. This decline was accompanied by a decline in selling prices for the first time in three years, reflecting companies’ efforts to maintain competitiveness amid weak demand.
These indicators are significant, as they may reinforce expectations that the European Central Bank will cut interest rates later this year. Some analysts expect the bank to make three potential cuts during 2025, based on this slowdown.
Jonas Veldhusen, an economist at Commerzbank Hamburg, commented that these data reflect “a real crisis of confidence in the French economy.” He emphasized that the continued contraction for the eighth month is a warning sign that requires a comprehensive review of fiscal and monetary policies.
He explained that the business expectations index fell below the growth threshold, reflecting a deeply pessimistic outlook for the future. Also he pointed out that this decline is not limited to domestic markets, but also extends to foreign trade, amid global tensions and geopolitical conflicts.
Despite some hope in the manufacturing sector, risks remain. Veldhusen believes that European investments in defense and Franco-German coordination to reduce regulatory barriers may partially mitigate the effects of this downturn, but they will not completely address it.
A Cloudy Future Looms Over the French Economic Outlook
Data indicate that industrial activity remains weak, despite a slight improvement in production levels. However, the decline in demand for manufactured goods continues to negatively impact the performance of French factories.
On the other hand, the services sector has not recorded any significant recovery. Service activity remains stagnant, with domestic and foreign demand continuing to decline. Businesses appear pessimistic, with many managers expressing concerns that the economy will remain weak in the second half of the year.
The Need for Urgent Economic Stimulus
Recent data underscores the need for urgent government intervention to support economic activity in France. The current situation requires stimulating fiscal policies and monetary easing to boost demand and stimulate investment. The absence of such policies could lead to a prolonged economic downturn.
At the European level, this data is likely to reinforce calls for unified action to support the affected economies. 2025 could be a pivotal year in determining the future of economic policy in the Eurozone, particularly for France.
French private sector activity declines in April amid weak domestic demand and business pessimism.
The French economy experienced a weak start to the second quarter of 2025, with the Composite Purchasing Managers’ Index (PMI) from HCOB and S&P Global showing a continued decline in private sector activity. The index fell to 47.3 in April, down from 48.0 in March, marking a further deterioration after seven consecutive months of contraction.
This sharp decline reflects weak domestic demand, as well as declining business confidence regarding future prospects. New business declined at a faster pace than the previous month, particularly in the services sector, contributing to a significant decline in sales.
In the services sector, the index fell to 46.8, its lowest level since February, reflecting significant pressure on companies that rely on the domestic market. Although the manufacturing sector saw a slight improvement in output, challenges remain, particularly regarding new orders and employment. On the other hand, the manufacturing sector production index rose to 50.3 points, its highest level since mid-2022. However, this increase does not reflect a general recovery, but rather a relative stabilization in some industrial sectors, especially after a long period of contraction.
Some French companies benefited from improved external demand, particularly from African markets and some European countries.
