France’s Economic Activity Plunges in May 2024, PMI Reports Deepest Contraction Since 2020
France’s Private Sector Faces Sharpest Downturn in Over Five Years
PMI Survey Reveals Accelerated Decline
PARIS, May 21 (Reuters) - France's private sector economy contracted in May at its sharpest pace in five-and-a-half years, reflecting an accelerated decline in services activity and a fresh drop in manufacturing production, a preliminary survey from S&P Global showed on Thursday.
Key Drivers Behind the Contraction
The steepest contraction since late 2020 was a consequence of the war in the Middle East, according to firms, who frequently cited fuel and energy cost pressures, as well as general economic angst, as reasons for lower output.
PMI Figures Highlight Sectoral Weakness
Services Activity Hits 66-Month Low
The S&P Global Flash France Purchasing Managers Index for services fell to 42.9 points in May from 46.5 in April, a 66-month low. That was below a Reuters poll for 46.6.
Understanding the PMI Threshold
Any figure below 50 shows a contraction in activity, while a reading above 50 points to expansion.
Manufacturing and Composite PMI Also Decline
The flash manufacturing May PMI fell to 48.9 points from 52.8 in April, and below a Reuters forecast of 52.2 points.
The composite PMI Index, which includes both services and manufacturing, fell to 43.5 points in May from 47.6 in April, a 66-month low.
Expert Insights on Economic Risks
Economists Warn of Rising Recession Risks
"May's 'flash' PMI survey for France provides a dire set of numbers. The inflationary impact of the oil-price shock continues to proliferate, with price indices in both manufacturing and services moving higher once again," said Joe Hayes, principal economist at S&P Global Market Intelligence.
"Alarmingly, we saw private sector new orders plummet in May, giving us a clear indication that this shock has materially lifted recession risks for the euro zone's second-largest economy," he added.
Reporting Credits
(Reporting by Dominique Vidalon; Editing by Toby Chopra)
