The French economy grew at the slowest pace in four months in May as the services sector lost momentum.

The HCOB Flash Composite Purchasing Managers’ Index for France fell to 51.4 from 52.4 in April, below the median forecast of economists of 52 and pointing to a modest increase in private sector business activity.

French businesses reported worsening demand, with total intakes of new work falling for the first time since February, according to surveys by by S&P Global. Business confidence dropped to its weakest level in five months.

Services posted a much softer increase in output than April’s solid expansion, while the manufacturing sector saw a 12th consecutive drop in production. The decrease in factory output was less steep than in April.

Firms reported weaker sales, citing a loss of clients, inflation and lower spending. New manufacturing orders also continued to fall sharply, while goods producers still saw rapidly deteriorating demand from abroad.

“The manufacturing sector continued to cool off in May, while the services sector continued to expand,” said Norman Liebke, an economist at Hamburg Commercial Bank. “By all accounts, the services sector, which accounts for 80% of the economy, will be the driving force in the second quarter.”

In a bright spot for the euro area’s second-biggest economy, hiring picked up in both sectors, leading employment to rise at the strongest rate in almost a year.

France’s economy rebounded in the first quarter of the year, defying fears that strikes and protests against French President Emmanuel Macron’s unpopular pension reform would drag down activity. Still, Fitch Ratings cut the country’s credit rating last month, citing its budget deficit levels for this year and next.

Earlier data from Japan showed both the service and the factory sectors expanded this month. Numbers from Germany, the whole euro zone, the UK and the US are due later on Tuesday.

--With assistance from Joel Rinneby and Mark Evans.