France May final services PMI 49.3 vs 49.4 prelim

• Prior 51.3
• Composite PMI 48.9 vs 49.1 prelim
• Prior 50.5

Demand conditions improved but the French services sector still slumped in May. That is seeing overall business activity ease back as well. The main culprit for that is a sharp decline in new export business. The good news for the ECB at least is that price pressures are at their lowest in three years. HCOB notes that:

“The latest HCOB PMI figures are giving mixed messages about the state of the French services sector. Although business
activity declined slightly in May, overall demand grew for the second month in a row. Additionally, although at a slower pace,
employment improved for another month, showing robust expectations about the future.

“New orders: Weak abroad, strong at home. The latest HCOB France Services PMI shows overall demand rising, but foreign
demand weakened for the third consecutive month, implying stronger domestic demand for at least two months in a row
now. Sales from Asia, the UK and the US were reportedly down.

“Services inflation slowed in May, but stayed fairly elevated. For input prices, the increase can be attributed to higher
salaries and greater supplier charges. Wages remain a risk for the ECB due to the possibility of a resurge in consumer price
inflation. Service providers managed to pass on higher costs to customers, but only partially, as evidenced by the output
prices index signalling only a marginal rate of increase.”

This article was written by Justin Low at www.forexlive.com.