PMI Markit : Business activity in French service sector continues to fall at marked rate (ENG)

Chris Williamson

Description

The downturn in France’s service sector was maintained in May. Activity fell at the same marked rate as in April, reflecting another drop in incoming new business. Backlogs of work decreased, albeit at a slower pace, while employment was down further. Input prices rose slightly, whereas output charges declined. Meanwhile, companies’
expectations regarding activity over the coming year were moderately positive.

Sujets

• Business Activity Statement
• France
• Service
• Markit Group
• PMI

Informations

• Publié par: Fil_Economie
• Publié le: 05 juin 2013
• Nombre de lectures: 41
• Langue: English

Extrait

News Release

® Purchasing Managers’ Index MARKET SENSITIVE INFORMATION EMBARGOED UNTIL: 08:50 (UK Time), 5 June 2013

® ® Markit France Services PMI– final data )(with Composite PMI Business activity in French service sector continues to fall at marked rate Key points: Overall activity across the French private sector fell (1) at a slightly slower pace in May, with the latest ƒatFinal Markit France Services Activity Index decrease the least marked in five months. This 44.3 (44.3 in April), unchanged. reflected an easing in the rate of decline of (2) ƒFinal Markit France Composite Output Index manufacturing output. at 44.6 (44.3 in April), 5month high. The level of new business with service placed Historical overview: providers in France decreased for a fourteenth successive month during May, and at a solid rate. Markit French Composite PMI vs GDP Panellists commented that demand conditions were PMI Composite Output, sa (50.0=no change) % yr/yr weak and that a number of clients had postponed 70 5 GDP orders. 4 65 3 Composite data signalled a moderation in the rate 60 2 of contraction of new business across the private 55 1 sector, as manufacturers recorded a much slower 50 0 1 drop in new orders compared with April. May’s fall 45 in overall new work was the slowest since last 2 40 August. Markit Composite PMI 3 35 4 Backlogs of work  inthe French service sector 30 5 were down further in May. This continued the trend 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 observed since January 2012. The rate of Sources: Markit, INSEE contraction in outstanding business was solid, albeit Summary: the slowest in nine months. The downturn in France’s service sector was With manufacturers also noting a weaker drop in maintained in May. Activity fell at the same marked backlogs, overall levels of outstanding business in rate as in April, reflecting another drop in incoming the French private sector fell at the least marked new business. Backlogs of work decreased, albeit rate since March 2012. at a slower pace, while employment was down May data signalled another decrease in further. Input prices rose slightly, whereas output employment French service providers. The at charges declined. Meanwhile, companies’ latest drop in staffing levels was solid, despite the expectations regarding activity over the coming pace of job shedding easing slightly since the year were moderately positive. previous survey period. The seasonally adjusted final Markit France Composite data similarly showed a slightly slower Services Business Activity Index – which is decrease in employment across the French private based on a single question asking respondents to sector as a whole in May. report on the actual change in business activity at their companies compared with one month ago – Input prices  inthe French service sector were up recorded 44.3 in May. The latest reading was marginally during May. Higher prices for raw unchanged since April and pointed to a substantial materials and increased staff salaries were rate of contraction. generally reported to have led to the latest rise. In conjunctionwith © Markit Economi Page 1 of 3 cs Limited 2013

At the composite level, input prices were down for a second consecutive month in May, although the latest reduction was only fractional. Prices charged  byservice providers in France were lowered for the fourteenth successive month during May. Moreover, the latest fall in tariffs was the sharpest since February. Panellists commented on intense competitive pressures as a key factor bearing down on selling prices. In some cases, firms reported that they had reduced their charges following requests from clients. Output prices across the private sector fell further in May, with the rate of decline broadly unchanged from April’s solid pace. Business expectations  atFrench service providers were positive for a second consecutive month in May. However, the degree of optimism was only modest and weaker than in April. Indeed, the index measuring sentiment was considerably below its longrun average. Those panellists anticipating a rise in activity over the next 12 months frequently cited the implementation of new commercial strategies. However, other respondents noted that a difficult economic climate remains a factor weighing on confidence. Comment: Jack Kennedy , Senior Economist  at Markit  and ® author of the France Services PMI, said: “Service providers in France reported another difficult month in May, with activity continuing to fall at a marked rate. A further substantial cut in output prices did not prevent new business contracting at a solid pace, weighed down by a weak demand environment and lack of client confidence. Meanwhile, panellists’ subdued sentiment regarding future activity suggests that firms expect tough conditions to persist. Composite PMI data for the first two months of Q2 point towards a further contraction of GDP following the news that the French economy was in recession in the previous two quarters.” Ends

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© Markit Economics Limited 2013

For further information, please contact:

Markit Jack Kennedy, Senior Economist Telephone 441491461087 Email [e-mail]

Notes to Editors:

Caroline Lumley, Corporate Communications Telephone +442072602047 Mobile +447815812162 [e-mail]

The France Services PMI (Purchasing Managers' Index) is produced by Markit and is based on original survey data collected from a representative panel of over 300 companies based in the French service sector. The final France Services PMI follows on from the flash estimate which is released a week earlier and is typically based on at least 75% of total PMI survey responses each month. The May flash was based on 91% of the replies used in the final data. The France Composite PMI (Purchasing Managers' Index) is produced by Markit and is based on original survey data collected from a representative panel of over 700 companies based in the French private sector economy. The final France Composite PMI follows on from the flash estimate which is released a week earlier and is typically based on at least 75% of total PMI survey responses each month. The May flash was based on 91% of the replies used in the final data. The average differences between the flash and final PMI index values (final minus flash) since comparisons were first available in January 2006 are as follows (differences in absolute terms provide the better indication of true variation while average differences provide a better indication of any bias):  AverageAverage difference Index differencein absolute terms (1) France Services Output Index0.2 0.6 (2) France Composite Output Index0.2 0.5

Notes 1. The Services Business Activity Index is the direct equivalent of the Manufacturing Output Index, based on the survey question “Is the level of business activity at your company higher, the same or lower than one month ago?”

2. The Composite Output PMI is a weighted average of the Manufacturing Output Index and the Services Business Activity Index.

The Purchasing Managers’ Index (PMI) survey methodology has developed an outstanding reputation for providing the most uptodate possible indication of what is really happening in the private sector economy by tracking variables such as sales, employment, inventories and prices. The indices are widely used by businesses, governments and economic analysts in financial institutions to help better understand business conditions and guide corporate and investment strategy. In particular, central banks in many countries (including the European Central Bank) use the data to help make interest rate decisions. PMI surveys are thefirstof economic conditions indicators published each month and are therefore available well ahead of comparable data produced by government bodies.

Markit do not revise underlying survey data after first publication, but seasonal adjustment factors may be revised from time to time as appropriate which will affect the seasonally adjusted data series. Historical data relating to the underlying (unadjusted) numbers, first published seasonally adjusted series and subsequently revised data are available to subscribers from Markit. Please contact [e-mail].

About Markit Markit is a leading, global financial information services company with over 2,800 employees.The company provides independent data, valuations and trade processing across all asset classes in order to enhance transparency, reduce risk and improve operational efficiency. Its client base includes the most significant institutional participants in the financial marketplace.For more information, see www.markit.com.

About PMIs ®® Purchasing Managers’ Indexsurveys are now available for 32 countries and also for key regions including the Eurozone. They are(PMI ) the most closelywatched business surveys in the world, favoured by central banks, financial markets and business decision makers for their ability to provide uptodate, accurate and often unique monthly indicators of economic trends. To learn more go to www.markit.com/economics. The intellectual property rights to the France Services PMI and Composite PMI provided herein is owned by Markit Economics Limited. Any unauthorised use, including but not limited to copying, distributing, transmitting or otherwise of any data appearing is not permitted without Markit’s prior consent. Markit shall not have any liability, duty or obligation for or relating to the content or information (“data”) contained herein, any errors, inaccuracies, omissions or delays in the data, or for any actions taken in reliance thereon. In no event shall Markit be liable for any special, incidental, or ® ® consequential damages, arising out of the use of the data.Purchasing Managers' Index andPMI areregistered trade marks of Markit Economics Limited. Markit and the Markit logo are registered trade marks of Markit Group Limited.

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© Markit Economics Limited 2013