France’s economy sees unexpected private sector contraction

France’s private sector unexpectedly contracted in May after showing growth in April, with both the services and manufacturing industries reporting declines, according to a preliminary survey on Thursday, Reuters reported.

The HCOB flash purchasing managers index (PMI) for the services sector, compiled by S&P Global, dropped to 49.4 from 51.3, missing the 51.6 forecast in a Reuters poll. The flash manufacturing PMI rose slightly to 46.7, above the forecast of 45.8 and April’s 45.3.

The flash composite PMI, which combines both sectors, fell to 49.1 from 50.5, below the expected 50.9. Despite these figures, Hamburg Commercial Bank economist Norman Liebke noted that strong domestic demand would support growth in the second quarter.

France’s central bank predicts slight economic expansion in Q2 after 0.2 per cent growth in Q1.