New data suggests that the French economy is “stalling” as uncertainty caused by a snap election halts business investment.
Activity in services and manufacturing has declined this month, delivering a blow to the euro area’s second-largest economy, according to the latest purchasing managers’ index (PMI) published by S&P Global.
Norman Liebke, an economist at Hamburg Commercial Bank, noted that businesses are citing the snap election called by French President Emmanuel Macron as a key reason for the slowdown.
He stated, “The uncertainty of the upcoming elections has French businesses stalling and fearing tougher times.”
This was reflected in new orders in services, which fell for the first time in three months, and in weaker predictions for future output.
The PMI index, where a number above 50 suggests growth and below indicates contraction, dropped to 48.8 in June from 49.3 in May, marking the lowest figure in three months.
Manufacturing output also fell, with the index declining from 46.9 to 45.3—a five-month low.
President Macron surprised France earlier this month by announcing snap parliamentary elections for June 30 and July 7, following a strong showing by right-leaning parties in EU elections.
Since then, political alliances have been shifting rapidly, with predictions suggesting Marine Le Pen’s National Rally party could make significant gains.
Macron, whose party lost its parliamentary majority in 2022, has defended the decision, insisting it was the “most responsible solution.”
