PARIS, (Reuters) – French business growth was lower than anticipated in January compared to December. Initial estimates in a monthly poll indicated that this is because of the effects of COVID-19 inflationary pressures on activity.

IHS Markit data compiler said the flash purchasing managers index (PMI for France’s dominant sector services) fell to 53.1 from 57.0 in December, below the forecast for a January reading at 55.3 points.

However, the readings for services remained over the threshold of 50 points, which indicates an increase in activity.

Although the reading of January’s flash PMI for French manufacturing was lower than 55.6 points, it still remained in line with predictions.

The composite flash PMI in January (which includes the manufacturing and services sectors) fell to 52.7 points, from 55.8 points in December. It was below the forecast at 54.5 points.

IHS Markit reported that these figures highlight the impact on business of the COVID virus fifth wave currently affecting the country and the inflationary pressures resulting from rising energy prices.

Joe Hayes, senior economist at IHS Markit said that “Given France’s increasing number of COVID-19-related cases per day, it is no surprise that we see softer PMI numbers for January.”

Supply chain problems continue to affect the economy, especially manufacturers. However, we have clearly seen the worst with delivery times increasing to an extent that was not seen in much of 2021. Hayes said that inflationary effects are still in place and were exacerbated due to rising energy and staff costs.