French manufacturing growth accelerates in December, PMI shows

[PARIS] French manufacturing activity accelerated in December to expand at its fastest pace in almost two years, according to a survey of corporate purchasing managers released on Monday.

Data compiler Markit said its final purchasing managers'index (PMI) rose to 51.4 in December from 50.6 in November, the highest level since March 2014 and the fourth consecutive month above the 50-point line that divides growth and contraction.

That was slightly lower than a "flash" reading of 51.6. But it suggested underlying activity outside the dominant service sector remained unaffected by the attacks that killed 130 people in Paris in November, and it was starting to benefit from cheaper oil, a weaker euro and low interest rates.

"Falling commodity prices gave manufacturers scope to cut their output charges further, which they will hope will support continued growth in new orders early in the New Year," Markit economist Jack Kennedy said.

One case in point was French car registrations, which saw their highest annual rise since 2009 last year, helped by a 12.5 per cent increase in December, according to figures published last week.

In an encouraging sign for growth at the start of 2016, Markit said French manufacturers reported the fastest increase in new orders since April 2014. Export orders swung back to growth last month after a drop in November.

President Francois Hollande, who has staked his political future on a sustained drop in unemployment, will also be cheered by Markit's employment index, which returned to positive territory, at 50.2, for the first time in 21 months.

Final PMI data for the bigger services sector, which in a preliminary reading showed a greater impact from the Paris attacks, will be published on Wednesday.

REUTERS