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French private sector picks up in October: flash PMIs

[PARIS] Activity in the French private sector accelerated in October, according to a widely watched survey of businesses released on Friday, suggesting weakness over the summer was just a blip and that a recovery was taking hold.

The preliminary "flash" reading of the Markit Purchasing Managers Index (PMI) for manufacturing rose to 50.7 in October from 50.6 in September, beating analysts' expectations for a decline to 50.2.

Activity in the dominant services sector also confounded analysts' expectations of a slowdown, with the services PMI index rising to 52.3 in October from 51.9 in September.

That pushed the aggregate of the two - the composite PMI index - up to 52.3 from 51.9 in September, above the 50 mark that separates expansion and contraction and suggesting a Chinese slowdown was not blowing France's recovery off course. "French private-sector output growth firmed slightly in October, underpinned by rising activity across both services and manufacturing," Markit Economist Jack Kennedy said.

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Markit also said manufacturers reported the first increase in new orders for 18 months. New export orders rose for the first time since May, at the fastest pace in two years.

On the employment front, however, companies continued to trim staff, albeit at a marginal pace.

The positive PMI figures, based on a panel of 750 companies in France, chime with other surveys, including that of the national statistics agency INSEE, whose business morale index rose to a four-year high in October.

Official gross domestic product data showed the euro zone's second-largest economy flatlined in the April-June quarter after a strong 0.7 per cent rise in the first three months of the year.