France’s private sector downturn intensified in August, with the HCOB Composite Purchasing Managers’ Index falling to 48.8 from 49.1 in July, below the consensus forecast of 49.5. This marked a second consecutive month in contraction territory, as any reading under 50 indicates shrinking activity.
The services PMI, a critical part of the eurozone’s second-largest economy, dropped to 48.4 from 50.1 in July, missing expectations of 49.8. The decline was driven by weaker new orders, softer business confidence and softening employment conditions, while manufacturing continued to face weak demand and high energy costs.
The disappointing data reinforces expectations that the European Central Bank may need to consider additional policy support. While inflation has moderated, the risk of a prolonged downturn is becoming more pronounced. Markets could adjust bets on future rate cuts, which may influence the euro and government bond yields.
For crypto markets, the print adds to a macro backdrop of sluggish eurozone growth and risk-off sentiment, although hopes for more accommodative ECB policy could partially offset the negative signal.
