France PMI Services was finalized at 56.8 in July, down from June’s 57.8. PMI Composite was finalized at 56.6, down from July’s 57.4. Markit said robust demand supported strong activity growth. Backlogs rose at joint-fastest pace since April 2011. Output price inflation hit decade high.
Joe Hayes, Senior Economist at IHS Markit said: “Although the headline PMI dipped slightly, the data is consistent with activity growing at a strong pace, much like we saw in the previous two months since pandemic-related restrictions have been peeled back. Pent-up demand is considerable, and firms are struggling to meet it, as evidenced by one of the strongest increases in backlogs of work for a decade. This is a good thing in the short-term as it means the economic recovery will have legs to continue through the third quarter and hopefully beyond.
“That said, current conditions have handed businesses an incredible amount of pricing power. While inflationary pressures are not quite as alarming as they are in the manufacturing sector, there’s clear spillover effects from the severe supply chain disruptions, as firms cited this as a reason behind July’s 34-month high in input costs. In response, firms upped their fees to the greatest extent in a decade. If the price rises we’re seeing remain sticky, inflation will no longer be transitory.”
