French service activity pulls back from the brink in May: PMI

(C) Reuters. A view shows a closed restaurant in Paris

PARIS (Reuters) – French service sector activity improved more than initially thought in May as the country began emerging from a nationwide coronavirus lockdown, although it remained at depressed levels, a monthly survey showed on Wednesday.

Data compiler IHS Markit said its Purchasing Managers’ Index (PMI) for the sector rose to 31.1 from a record low of 10.2 in April, when France was in the depths of the lockdown.

The result was better than the 29.4 IHS Markit had flagged in an initial reading, but remained far below the 50-point threshold demarcating an expansion in activity from a contraction.

France entered one of Europe’s most stringent lockdowns in mid-March and restrictions remained in place until May 11, with cafes and restaurants only allowed to open for regular business on Tuesday.

The improvement in services helped lift the overall PMI, including already published data from the manufacturing sector. The composite PMI rose to 32.1 from 11.1, topping the 30.5 initially reported.

“Rates of activity decline at both manufacturers and service providers did ease in May, and we should expect this trend to continue as more and more firms reopen for business,” IHS Markit economist Eliot Kerr said.

“Although we might see further contractions while demand remains subdued, PMI figures should continue to climb in the months ahead barring a second outbreak,” he added.

The coronavirus crisis has plunged the euro zone’s second-biggest economy into its worst recession since World War Two and left many firms struggling to get back on their feet after the lockdown.