Private sector business activity was slightly weaker than originally thought in May. The 51.4 flash composite output index was revised down to 51.2, now 1.2 points below its final reading in April and just 1.2 points above the expansion threshold.

However, the headline revision masked a somewhat stronger service sector where the 51.4 flash PMI was raised to 52.5. That said, this was still more than two points below its final 54.6 mark at the start of the quarter and its lowest reading since January. New orders declined for the first time since the start of the year led by weakness in the domestic market as overseas demand continued to rise. Employment growth also eased versus April, but the rate remained robust and above its long-term average. Even so, backlogs accumulated further, albeit by the least in the last four months. Looking ahead, companies were optimistic about the coming year but sentiment still dipped to a 3-month low.

Inflation pressures remain significant mainly due to higher salaries. However, despite this, cost inflation eased to a 20-month low. By contrast, output price inflation accelerated to its highest rate in three months.

In sum, today's update points to a loss of economic momentum in May. Quarterly growth should be positive but only sluggish at best. The French ECDI and ECDI-P remain well in negative surprise territory at minus 35 and minus 24 respectively. Economic activity in general continues to run well short of market expectations.

No revisions are expected to the flash data.

The Composite Purchasing Managers' Index (PMI) provides an estimate of private sector output for the preceding month by combining information obtained from surveys of around 750 manufacturing and service sector companies. Results are synthesised into a single index which can range between zero and 100. A reading above (below) 50 signals rising (falling) output versus the previous month and the closer to 100 (zero) the faster is output growing (contracting). The report also contains the final estimate of the services PMI. The data are provided by S&P Global.

Investors need to keep their fingers on the pulse of the economy because it dictates how various types of investments will perform. By tracking economic data such as the purchasing managers' manufacturing indexes, investors will know what the economic backdrop is for the various markets. The stock market likes to see healthy economic growth because that translates to higher corporate profits. The bond market prefers less rapid growth and is extremely sensitive to whether the economy is growing too quickly and causing potential inflationary pressures.