Some positive economic signs in France, but only just
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A key economic indicator released today shows the economic downturn in France may be stabilising, but economists warn that France and the Eurozone are not out of the woods just yet.
The Markit France Composite Output Index – a survey of manufacturing and service sector activity conducted by the British firm Markit – is at 49.1 points in seasonally-adjusted terms, a 17-month high and up from 47.4 points in June.
An index above 50 indicates growth, therefore the data suggest economic activity is still shrinking in France, but not as quickly as before.
The survey also found the number of job cuts is at its weakest since June 2012. The service and manufacturing sectors reported a slower decline in new business activity, and overall new business across the French private sector decreased at the weakest rate since the start of the current pattern of decline in March 2012.
French service businesses were optimistic that business activity would increase by July next year, showing the highest boost to business confidence since August 2012.
Jack Kennedy, a senior economist at Markit, said the “sunnier outlook appears to be taking hold”.
For the Eurozone as a hole, the Composite Purchasing Managers Index (PMI) for July came in at 50.5 points, the first growth reading in 18 months.
The survey of sentiment among thousands of purchasing managers – the people responsible for buying materials and products for businesses – is widely seen as a reliable gauge of economic activity.
The PMI for Europe’s largest economy, Germany, was 52.1 points, while France, Italy and Spain were below the 50-point benchmark.
Rob Dobson, another senior economist at Markit, said the 50.5 point reading for the 17-member Eurozone “confirms a welcome return to growth for the Eurozone economy at the start of the third quarter, raising hopes that the region can finally claw its way out of its longest-running recession.”
Even though the region has seen false hopes before, he said there is cause for optimism this time around.
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