France: Composite PMI ticks down in May amid protracted supply disruptions
May 24, 2022
The S&P Global Flash Purchasing Managers’ Index (PMI) fell to 57.1 in May from 57.5 in April. Despite the downtick, the index remained above the 50-threshold, signaling a milder improvement in business conditions from the previous month.
May’s weaker result was driven by softer expansions in both the services and manufacturing sectors. Although easing from the prior month, the services sector remained robust in the month, benefiting from relaxed pandemic-related curbs. In contrast, the manufacturing sector’s elevated price pressures led to softer overall demand as customers were dissuaded by the geopolitical uncertainty and global supply disruptions.
On the price front, these aforementioned supply-chain issues resulted in markedly higher input prices and output costs, with both marking the highest figures on record due to the war in Ukraine, shortage of components and higher prices for fuel and transport. This, in turn, led optimism to soften from April amid longer-than-expected supply delays and the ongoing Russian invasion.
Commenting on the May’s release, Joe Hayes, Senior Economist at S&P Global, noted:
“The French economy is showcasing a remarkable degree of resilience amid mounting economic headwinds. [...] According to our panel members, businesses, particularly in the service sector, enjoyed another boost to their order books as a result of the removal of pandemic restrictions in recent months. The picture is more gloomy on the manufacturing side of France. As well as sustained supply-chain pressures and challenging conditions for exporters, rapid inflation is dissuading clients from placing orders. […] As a result, we saw further evidence of a two-speed economy emerging within France as a resilient service sector continues to mask sluggishness across the manufacturing industry.”
Author: Jonuel Pérez, Junior Economist