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French manufacturing shows signs of life as flash PMIs rise for September
[PARIS] French private-sector activity rebounded in September from its summer torpor, as manufacturing output swung back to growth after two consecutive months of decline, according to a widely watched survey of businesses released on Wednesday.
The preliminary "flash" reading of the Markit Purchasing Managers Index (PMI) for manufacturing rose to 50.4 in September from 48.3 in August, rising above the 50 mark that separates expansion and contraction and beating analysts' expectations for a 48.5 reading.
Activity in the dominant services sector also accelerated more than expected in September, taking the index to 51.2 from 50.6 in August. That pushed the aggregate of the two - the composite PMI index - up to 51.4 from 50.2 in August.
But Markit Chief Economist Chris Williamson cautioned against reading too much into the September uptick. Widespread shutdowns during the July and August holidays kept the average PMI reading for the third quarter below that of the second.
"France isn't sliding into recession, it's just about managing to expand," Williamson said - the PMIs were consistent with 0.1 per cent growth in third-quarter GDP. "It's a broad-based, sluggish expansion across services and manufacturing."
Official gross domestic product data showed France's economy flatlined in the April-June quarter after a strong 0.7 per cent in the first three months of the year.
In manufacturing, the output sub-index rose to 51.9 in September, the highest reading since March 2014. That reading spent 18 of the last 24 months below the 50-mark. "It's the first real sign of life that we have in the French factory sector for one and a half years," Mr Williamson said.
However, in a worrying sign for President Francois Hollande, who has pinned his hopes of re-election on a drop in unemployment, French firms shed jobs at the fastest rate in 10 months, with some panelists saying they had chosen not to replace voluntary leavers.
French companies also continued to cut prices - a trend seen since May 2012 - with anecdotal evidence pointing to strong competitive pressures, Markit said.