France economic outlook shows mixed signals as growth forecasts fall

France is experiencing conflicting economic signals. Insee has significantly lowered its annual growth forecast for the French economy to 0.4%, down from the 0.7% anticipated in June. This slowdown is expected to lead to a rise in unemployment, with the rate projected to climb from 8.3% to 8.6% by the end of the year, alongside a predicted loss of 52,000 salaried jobs in 2026.

In contrast, the French private sector showed unexpected resilience in September. The composite index for services and manufacturing rose to 51.2, surpassing economist expectations of 48.7 and marking the strongest expansion in over two years. This rebound was primarily driven by the services sector, which reached a ten-month high. However, manufacturing production has slowed, and despite the growth in business volume, companies have reduced staff for five consecutive months due to layoffs and contract endings. Rising costs for energy, fuel, and metals continue to pressure businesses, while business confidence remains low due to political uncertainty and interest rate hikes.