Market Analysis

In August, France's economy experienced a boost thanks to the Olympic Games, as a notable increase in the services sector offset ongoing challenges in manufacturing, according to a survey released on Thursday.

The HCOB flash purchasing managers' index (PMI) for France's services sector, compiled by S&P Global, surged to a 27-month high of 55.0 in August, up from 50.1 in July and surpassing the 50.3 forecasted in a Reuters poll. A PMI reading above 50 indicates expansion, while below 50 signifies contraction.

France, the second-largest economy in the eurozone, has relied on the Olympics to improve its modest growth rate. The national statistics office had predicted a 0.3 percentage point increase in growth due to the Games, which concluded earlier this month.

The flash composite PMI for August, which combines services and manufacturing sectors, climbed to 52.7 - the highest in 17 months - from 49.1 in July.

Despite this positive development, S&P Global cautioned that the benefits of the Olympics might be short-lived. "Service providers have likely gained from the Olympic Games," noted Hamburg Commercial Bank economist Norman Liebke. "However, this temporary boost is evident in the deteriorating employment situation, weaker output expectations, and decreasing backlogs of work."

In contrast, France's manufacturing sector continued to face difficulties. The flash manufacturing PMI for August fell to 42.1, down from 44.0 in July and below the 44.4 forecasted in a Reuters poll.

Paraphrasing text from "Reuters" all rights reserved by the original author.