France’s services sector continued to contract in December, but at a slower pace, according to data from S&P Global’s closely-watched survey released on Monday.

The HCOB Services PMI Business Activity Index rose to 48.2 in December from 46.9 in November. While the reading exceeded analysts’ forecasts of 46.7, it remained below the 50.0 mark that separates growth from contraction.

The broader French private sector also showed slight improvement, as the Composite PMI Output Index increased to 46.7 from 45.9, outperforming expectations of 45.9. However, the manufacturing sector faced steeper challenges, with its PMI dropping to a 55-month low of 39.6, down from 41.1.

“The service sector remains in a state of uncertainty. Apart from the brief boost during the Paris Summer Olympics, service providers have struggled to achieve sustained growth,” noted Tariq Kamal Chaudhry, Economist at Hamburg Commercial Bank.

Survey respondents pointed to political instability and weak demand as major hurdles, which have led to a significant decline in employment.

While business confidence saw a modest uptick, the overall outlook remains cautious amid lingering political uncertainty, the survey indicated. Photo by besopha, Wikimedia commons.