French business activity slows, prices rise in May

According to the Banque de France's survey of approximately 8,500 companies, activity increased more moderately in April across industry and construction, while remaining stable in market services.

Industrial production still rose at a marked pace, exceeding long-term averages, with robust growth in electrical equipment and aeronautics, partly due to the defence sector.

Computer, electronics, and optical products also maintained momentum.

For May, business leaders anticipate broadly stable activity, with slight falls in industry and construction, and a more marked decline in services—the first such decline since March 2025.

The uncertainty indicator, though easing slightly in April, remains elevated across all three sectors following the Middle East conflict.

Concerns persist regarding raw material prices and logistical disruptions.

Cash positions were considered close to normal in industry but deteriorated in services.

Supply difficulties intensified in several sectors, including aeronautics, electrical equipment, chemicals, and computer, electronic, and optical products, while recruitment difficulties remained broadly stable.

Growth in raw material prices accelerated, although still below 2022 levels.

Industrial and construction firms are only partially passing these increases through to selling prices due to a highly competitive environment, expecting further rises in May.

In services, price revisions are concentrated in transportation and storage, directly exposed to higher diesel prices.