Prior 49.6Manufacturing PMI 50.2 vs 49.5 expectedPrior 50.1Composite PMI 48.3 vs 49.3 expectedPrior 49.9It's not a good look for France's economy at the end of Q1 with business activity slumping to a five-month low. The services sector was the main drag, also seeing its weakest showing in five months as it falls further into contraction territory. While manufacturing activity was a two-month high, it belies the underlying performance of the sector with output falling to a four-month low.Amid higher energy prices, a key focus of the report is on prices. And we're already seeing evidence of the Middle East crisis having an impact with input cost inflation accelerating sharply toits strongest since November 2023. That in particular for the manufacturing sector. Trouble, trouble.HCOB notes that:"It's clear from March 'flash' PMI data that Europe'ssusceptibility to international supply-side disruptionremains high. Soaring oil and oil-product prices, risingfuel costs and disrupted maritime supply chains haveled to the worst delivery delays from vendors in overthree years and pushed up input prices for Frenchcompanies to an extent not witnessed since late-2023.We saw a very limited pass-through to selling prices,however, likely because prevailing demand conditionsprior to the war in the Middle East were subdued. Thisdynamic could play a crucial role in determining howmuch of this supply shock filters through to the widereconomy."March was further complicated by local elections,with firms reporting that clients held back on spendingas a consequence. For that reason, April may give us abetter indication of the true state of the economy, butfor now, France's burgeoning recovery looks to be onice. A sharp reduction in business confidence backsthis assessment, with the threat of higher inflation,prolonged supply-side disruption and heightenednear-term uncertainty prompting a re-evaluation of theoutlook." This article was written by Justin Low at investinglive.com.