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French services rebound masks renewed manufacturing weakness: PMIs
[PARIS] Activity in the French private sector was boosted by a stronger than forecast rebound in the dominant services sector in April, which offset an unexpectedly sharp contraction in the manufacturing, a poll showed on Friday.
Data compiler Markit said a preliminary reading of its composite monthly purchasing managers index rose to 50.5 in April from the 50.0 mark separating expansion from contraction it stood at in March.
Activity in the services sector bounced back to 50.8 from 49.9, higher than the 50.2 expected by economists in a Reuters poll and the highest level since last November, when Islamist militants killed 130 people in Paris.
The bloody attacks in cafes, a concert venue and a stadium had depressed activity in the French restaurant and hotel sector in the last five months.
But the reading for the manufacturing index fell to an 8-month low of 48.3 from the 49.6 registered in March, much below the improvement to 49.8 expected on average by analysts. "We saw services rebound with the strongest growth since November, employment was also tracking higher so maybe the service sector is lifting out of its stagnation that we have seen," Chris Williamson, chief economist at Markit said. "But the big concern is the manufacturing weakness, driven by exports falling at the fastest rate since January 2013, clearly French goods are struggling on the international market," he added.
Employment in the French private sector increased for the third time in the past four months, but at a marginal pace, Markit said, with the sub-index rising to 50.6 from 49.4.
French firms continued to slash prices in the face of strong competitive pressures, with the reading falling to 45.4 from 46.0, having been below the 50 mark for four years now.
However, the grim picture in the manufacturing sector painted by the PMIs contrasted with the results of a separate survey by national statistics office INSEE, which showed on Thursday morale in the industrial sector improving.