France's private sector economy rebounded far more than expected in May, with the composite PMI rising to 49.3 from 47.8 in April. While still below the level marking expansion, it is the smallest contraction in the past nine months. Economists expected no change from the flash reading of 48.0.

The service sector which has been contracting since September of last year, remains in contraction as well, nevertheless improved to 48.9 in May from April's 47.3, reaching its highest level since December. Still, the French consumer remains cautious. So long as that continues, it will weigh on the sector along with weak domestic demand more broadly.

Despite the improvement, flagging demand has induced services firms to cut prices in order to nudge demand higher. They are less optimistic on the outlook for the next twelve months, with growth expectations reaching a five-year low.

Mirroring other reports, French service companies filled backorders in order to maintain activity levels. Earlier this week, the manufacturing PMI rose to 49.8 in May from 48.7 and has underpinned the composite index.

Services have been lagging, but today's result, while still showing contraction, is a sign that the private sector is at least treading water in the face of uncertainty.

No change from the flash at 48.0 is the call for the May composite final, down from 47.8 in the April final. No change is expected from the flash at 47.4 for services, versus 47.3 in April final.

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.