| Consensus | Consensus Range | Actual | Previous | |
| Composite Index | 48.6 | 48.6 to 48.6 | 49.1 | 50.0 |
| Services Index | 47.9 | 47.9 to 47.9 | 48.4 | 50.1 |
Highlights
The private services sector started the year in contraction, falling at its most rapid pace in six months, coming in at 48.4 in January compared to 50.1 in December. It marks the first contraction since October of last year.
Price pressures were also evident, with input costs reaching a five-month high while services costs rose the most in slightly more than a year.
Further helping dampen sentiment was weak demand and a challenging economic environment. Weather also played a role, according to survey participants. Companies also worked through their order backlogs, hiring new staff in the process. While the activity could be seen as a welcome development, it begs the question when inventories will be worked to the bone. Absent new orders and increased demand, this is at best a rather poor bandage.
Still, businesses were optimistic for the next twelve months, which seems to be a continuing refrain. Compaines intend to increase investment over the course of the year. Intentions are one thing, while actions are quite another.
The composite index which also includes the manufacturing sector also fell, declining to 49.1 in January from 50.0 in December.
France's private sector continues to face headwinds, and while firms are optimistic, there is still no sign that optimism will be rewarded anytime soon.
Market Consensus Before Announcement
No revision expected in the composite final from the flash at 48.6. No change expected in services final from the flash either at 47.9
Definition
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.
Description
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.