France's economy gets mixed reviews

France's private sector suffered an unexpected contraction in May, as the dominant services industry joined manufacturing in experiencing a reversal of the previous month's growth.

According to the Hamburg Commercial Bank flash purchasing managers index, or PMI, compiled by S&P Global, rather than reaching the forecast figure of 51.6 points, activity in May in the service sector fell from April's 51.3 to 49.4 points.

The measuring system records anything above 50 points as expansion, and anything below as contraction.

The flash manufacturing PMI, which was 45.3 in April, performed slightly better, rising to 46.7 points, which was higher than the 45.8 forecast by Reuters, but still the wrong side of the dividing line.

The two sectors' combined flash composite PMI had been forecast to reach 50.9, but instead fell from April's figure of 50.5 points to 49.1.

The bigger picture outlook for the second-largest economy in the Eurozone is slightly more positive, however, with the latest monthly survey from the country's central bank predicting slight expansion in the second quarter, after a 0.2 percent increase in the first.

Norman Liebke, an economist at Hamburg Commercial Bank, said what growth there was would be fueled by strong domestic demand.

"The French services sector is showing signs of a sustainable upward trend … France's manufacturing sector is slowly making a comeback," he said.

At the start of the year, Charlotte de Montpellier, senior economist for France and Switzerland at the Netherlands bank ING, had predicted a "very sluggish" start to the year for the French economy, with gradual growth in the second half, including stimulation as a result of the Paris Olympic Games in the summer, but added that "the best we can say about the outlook for France this year is that it'll be moderate", with conditions "stabilizing but subdued".

With this year's GDP growth forecast to slip from 1.4 percent to 1 percent, and the government fiercely resistant to raising taxes as a way of staying on track in bringing down the country's deficit, Finance Minister Bruno Le Maire has already resorted to government cuts.

"Lower growth means lower tax receipts, so the government must spend less," he announced in February.

Budget Minister Thomas Cazenave told the Financial Times this would be a delicate process, avoiding any side-effects with damaging consequences.

"Our challenge is to find savings and clean up public finances but without breaking what are the best allies for recovery, that is to say growth and job creation," he said. "We do not want massive tax increases, which will hurt economic dynamism and damage purchasing power."