- 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."
