- Services PMI 44.3 vs 42.9 prelim
- Prior 46.5
- Composite PMI 44.9 vs 43.5 prelim
- Prior 47.6
Even with an improvement to the initial estimates, this is still a very poor reading for French services activity. Of note, both activity and new business levels decreased
at their steepest rates in five-and-a-half years with employment conditions also deteriorating at its quickest pace since early last year.
Adding more woes to the weakening business sentiment is that the French economy saw a further sharp uplift in
inflationary pressures during May.
The rate of input price
inflation accelerated for the third straight month in May,
reaching its highest in just over three years. Meanwhile, French service providers raised their charges midway through
the second quarter as rapid cost increases prompted at least
some pass-through to customers. The extent to which output
prices rose was the quickest since June 2023.
S&P Global notes that:
“France’s service sector, which had already been
showing vulnerability prior to the outbreak of war in the
Middle East, suffered a heavy setback in May. Further
falls in the PMI measures of activity and new business
took them down to levels which ring recession alarm
bells.
“Geopolitical uncertainty is restricting decision-making,
while surging price pressures are eroding purchasing
power. It’s hard to see how France’s economy can spring
back to life against this backdrop, strongly raising the
prospect of a contraction in GDP for the second quarter.”
This article was written by Justin Low at investinglive.com.
