France’s private sector has started to shrink again
Fresh business surveys released today suggest that France's recovery remains on shaky ground.
Purchasing managers' index (PMI) data for May, compiled by Markit, shows business activity in both France's manufacturing and services sectors has fallen into contractionary territory, as the headline output reading dropped from 50.6 to a three month low of 49.3.
Any number below 50 implies contraction. PMIs for manufacturing and services fell from 51.2 to 49.3, and 50.4 to 49.2 respectively.
Thankfully, notes Markit, in both cases rates of decline were "slight and fractional", while employment in the French private sector fell for a seventh successive month as the "malaise looks set to persist, dashing hopes of any convincing recovery taking hold."
Jack Kennedy, senior economist at Markit, says that the surveys suggest that France continues to see "stuttering economic performance", with today's PMI data suggesting that GDP will disappoint in the second quarter.
Statistics published by INSEE earlier today also showed a small fall in the statistics agency's business climate indicator this May, from 100 to 99. Analysts had expected the reading to remain unchanged.
BNP Paribas' Victor Echevarria says that the "weak surveys in France point to weak recovery", as the PMIs note their second consecutive decline, taking business activity back to levels seen in February.
Echevarria says that today's numbers highlight "the continued weakness of the recovery in France". BNP Paribas forecasts 0.3 per cent quarter-on-quarter GDP growth in the second quarter, after France saw no growth at all in the first three months of 2014, although today's data underscores the "downside risks to that forecast".
(Source: Markit)