FX.co ★ France Private Sector Unexpectedly Shrinks

In May, France's private sector surprisingly contracted after showing growth in the previous month, according to flash survey results released by S&P Global on Thursday.

The headline HCOB flash composite output index decreased to 49.1 in May from 50.5 in April, contrary to forecasts which anticipated an increase to 51.0.

A reading below the neutral 50.0 mark indicates that the sector shifted from expansion to contraction in May. Hamburg Commercial Bank economist Norman Liebke commented, “Although the HCOB Composite Output PMI slightly dipped below 50 in May, there is no cause for significant concern. Our HCOB Nowcast predicts a 0.3% economic growth for the second quarter.”

Liebke added, “While this growth is robust in comparison to recent quarters, it is marginally below the previous estimate of 0.4%, owing to the lower-than-expected HCOB PMI figures.”

The overall reduction in activity spanned across sectors, primarily driven by a notable decline in services activity, which brought the headline index back below the pivotal 50.0 threshold.

The services Purchasing Managers' Index (PMI) fell to 49.4 in May from 51.3 in April, missing economists' forecast of 51.8.

Conversely, the manufacturing PMI rose to a three-month high of 46.7 from 45.3 the previous month, surpassing the expected figure of 45.8.