Dr. Tariq Kamal Chaudhry, an economist at Hamburg Commercial Bank, linked the contraction to the fading 'Olympic euphoria' following the conclusion of the Paris Olympic Games.

Despite the contraction in the services sector, business confidence surged to its highest level since July 2022, bolstered by recent rate cuts from the European Central Bank.

This optimism has led to continued hiring, with expectations of a potential pick-up in activity later this year and into 2025.

The final composite PMI for September was revised to 48.6, a decline from an initial estimate of 47.4 and significantly lower than the 53.1 recorded in August.

The flash services PMI for September was reported at 48.3 points, highlighting ongoing challenges in the sector.

A PMI reading below 50.0 signifies a decline in activity, reflecting a marginal contraction in the services sector.

Surveyed companies cited declining customer numbers, reduced willingness to spend, and uncertainty as key factors contributing to the downturn.

In September, France's services sector experienced a contraction, as indicated by the HCOB France Services PMI, which fell to 49.6 from 55.0 in August.