French business recession eases in May as lockdown unwound: PMI

(C) Reuters. FILE PHOTO: Golden Statues at the Trocadero square near the Eiffel tower wear protective masks during the outbreak of the coronavirus disease

PARIS (Reuters) – France’s business slump eased in May, albeit not quite as much as expected, as a nationwide coronavirus lockdown was lifted earlier this month, a survey showed on Thursday.

Data compiler IHS Markit said its composite purchasing managers’ index rose to 30.5 from a record low of 11.1 in April when vast swathes of the economy were shuttered.

The improvement fell just short of economists’ average prediction in a Reuters poll for 32.0 and was still far from the 50-point threshold dividing an expansion in business activity from a contraction.

Most shops and factories that had to close during the lockdown began reopening on May 11 when it was lifted, though cafes, bars and restaurants remain shut until early June.

“The data highlights the difficulties economies may face in the recovery from this crisis, as firms continue to lay off workers amid a persistently uncertain outlook,” IHS Markit economist Eliot Kerr said.

The euro zone’s second-biggest economy suffered its deepest recession since modern records began in 1948 in the first quarter, contracting 5.8% from the previous three months, the INSEE stats agency said last month.

But the second quarter may be far worse.

“Given the sharp contraction in first quarter GDP caused by only two weeks in lockdown, the latest PMI data suggest that we are set for a colossal reduction in economic activity during the second quarter,” Kerr said.

The data showed that in France’s dominant services sector the PMI rose to 29.4 from 10.2 in March, missing the 27.8 expected on average by economists.

Meanwhile in manufacturing, the PMI rose to 40.3 from 31.5, exceeding the 36.1 that economists had been expecting.