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French factory activity slows further in February: PMI

[PARIS] A downturn in France's manufacturing sector worsened in January, a survey showed on Monday, as a sharp decrease in new orders and sluggish demand fuelled more job-cutting.

Data compiler Markit's final purchasing managers' index, which includes the services and manufacturing sectors, fell to 47.6 in February from 49.2 in January.

That was slightly lower than a preliminary reading of 47.7 and brought the index further below the 50-point line dividing expansions in activity from contraction.

"The French manufacturing sector remained in a funk during February, with output and new orders falling at sharper rates," said Markit senior economist Jack Kennedy.

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The weak demand environment has increased the risks of deflation, and firms have responded by cutting jobs further and reducing their pre- and post-production stocks, he said.

The fall in new orders was the sharpest since August, Markit said, reflecting lacklustre demand. New export orders were down for the 10th month in a row, it added.

For the 11th straight month, employment in the manufacturing sector fell, with the rate of job shedding slightly more pronounced than in January, Markit said.