The French service sector showed signs of stabilization in July, according to the PMI data. The business activity index rose to 50.1 in July, slightly above the 50.0 threshold, ending a contraction from May to June. Despite this, new business, particularly from international sources, continued to decline. Business confidence hit a year-to-date low, with concerns over salary pressures and input price inflation persisting.

While the Olympic Games and the conclusion of the election period temporarily boosted activity, these gains were offset by challenging sales conditions and political uncertainties. Unfavourable weather further hindered sales performance. Although service providers expect growth in the next 12 months, optimism has waned for four consecutive months and remains below the long-term average. Some fear that the Olympics' current surge might lead to lower output next year, adding to the uncertainty in the demand environment.

As things stand, the RPI remains well in negative territory at minus 25, while the RPI-P currently stands at minus 21, meaning that economic activity, in general, is now running behind market forecasts.

No revisions are expected leaving the headline composite output index at 49.5, up from June's final 48.8.

The Composite Purchasing Managers' Index (PMI) provides an estimate of private sector output for the preceding month by combining information obtained from surveys of around 750 manufacturing and service sector companies. Results are synthesised into a single index which can range between zero and 100. A reading above (below) 50 signals rising (falling) output versus the previous month and the closer to 100 (zero) the faster is output growing (contracting). The report also contains the final estimate of the services PMI. The data are provided by S&P Global.

Investors need to keep their fingers on the pulse of the economy because it dictates how various types of investments will perform. By tracking economic data such as the purchasing managers' manufacturing indexes, investors will know what the economic backdrop is for the various markets. The stock market likes to see healthy economic growth because that translates to higher corporate profits. The bond market prefers less rapid growth and is extremely sensitive to whether the economy is growing too quickly and causing potential inflationary pressures.