France Services PMI Revised Down to 46.8, Contraction Slows

The downturn in France's services sector eased in June compared with May, even as the final purchasing managers' index came in softer than the initial estimate, S&P Global's survey showed Tuesday.

The index stood at 46.8, down from the preliminary 47.4. It remained above May's reading. The survey described the declines in output and new orders as the slowest since March. "There was a reduced drag on demand from non-domestic customers, as evidenced by a markedly softer fall in new export business," the survey said. The pace of deterioration eased sharply from May's five-and-a-half-year record.

On the inflation front, the data offered some relief. Input cost inflation softened for the first time since the outbreak of war in the Middle East, the survey said. Companies still reported greater fuel and energy costs along with salary increases. Output prices rose at a slower pace than in May, with some firms reluctant to raise charges because of competition and fears of losing clients.

The easing of cost pressures is a welcome sign for the European Central Bank, which has been wary of stagflation risks. The ECB held its key rate at 4% in June. The data adds to a mixed picture for the euro. The single currency was little changed after the release. For a broader view of currency market dynamics, see forex market analysis.

The final composite PMI for the eurozone is due later this week. The ECB next meets in July, with markets watching for any shift in guidance.