France's Services PMI Declines Amid Political Concerns

According to a recent survey, political uncertainty in France is affecting the country's service sector. The HCOB France Services Purchasing Managers' Index (PMI) declined to 46.9 in November, down from 49.2 recorded in October, indicating a contraction in sector activity. However, the final reading showed a slight improvement compared to the flash services PMI of 45.7 reported earlier in November.

The broader final composite PMI, which encompasses both services and manufacturing, also experienced a decline, falling to 45.9 in November from 48.1 in October. This marks a loss of momentum for France's service sector for three consecutive months. The temporary increase in jobs observed during the summer, partially attributed to the Paris Olympics, has been overshadowed by rising political concerns.

Hamburg Commercial Bank economist Tariq Kamal Chaudhry commented on the decline, highlighting the temporary nature of the positive trends observed during the summer. Chaudhry noted that recent data underscores the fragility of business confidence amid the political uncertainty surrounding Prime Minister Michel Barnier's government.

The potential collapse of Barnier's minority government, particularly due to the budget impasse, is raising concerns within the French business community. The survey also revealed that French business confidence fell to its lowest level in over four years in November, reflecting the worries businesses feel in the face of political instability.

The state of the government and its impact on the eurozone's second-largest economy continues to be a focal point of concern for investors.