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French service sector growth weakened in May – final PMI
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PARIS (Reuters) – Growth in business activity in France’s dominant services sector weakened in May compared to April, a monthly survey showed, as the positive effect of fewer COVID-19 restrictions were offset by inflationary pressures.
Data compiler S&P Global said its final purchasing managers index (PMI) for France’s services sector fell to 58.3 points in May from 58.9 in April. A flash estimate had forecast a May services PMI figure of 58.4 points.
Any figure above 50 indicates expansion.
IHS Markit’s overall composite PMI index, which includes the services and manufacturing sectors, also fell to 57.0 points in May from 57.6 in April. A flash estimate had forecast a May composite PMI figure of 57.1 points.
Data published earlier this week showed the French economy unexpectedly shrank in the first quarter as consumers struggled to cope with surging inflation that reached a record-high rate of 5.8% over 12 months in May.
“The direction of travel for the French economy appears to be critically dependent on what happens in the service sector, given the notable range of headwinds facing goods producers at present. In the near-term, survey indicators suggest that economic growth is likely to continue,” said S&P Global Market Intelligence senior analyst Joe Hayes.
“Nevertheless, we must remain mindful of the downside risks at play. Sooner or later, the boost from fewer COVID-19 restrictions will begin to peter out. Spillover risks from manufacturing weakness, as well as output price inflation, which hit a new series peak in May, also pose sizeable threats to demand for services,” added Hayes.
(Reporting by Sudip Kar-Gupta; Editing by Toby Chopra)
The Purchasing Managers Index (PMI) is an economic indicator that measures the activity level of purchasing managers in the manufacturing and services sectors. A PMI above 50 indicates expansion, while below 50 indicates contraction.
Inflation is the rate at which the general level of prices for goods and services rises, eroding purchasing power. It is typically measured as an annual percentage increase.
Economic headwinds refer to factors that slow down economic growth, such as rising inflation, high unemployment, or reduced consumer spending. These challenges can impact business performance and overall economic stability.
Consumer confidence is a measure of how optimistic or pessimistic consumers are regarding their expected financial situation and the overall economic environment. High consumer confidence typically leads to increased spending.
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