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French service sector sags as hotels, cafes suffer post-attacks: PMI

[PARIS] Activity in France's dominant services sector was weaker in February than previously thought and the wider private sector contracted for the first time in over a year, a survey of businesses showed on Thursday.

Data compiler Markit said its Purchasing Managers' Index (PMI) for services fell to 49.2 from 50.3 in January, worse than a preliminary reading of 49.8 and further below the 50-point threshold separating expansion from contraction.

Markit's overall PMI index, which includes the services and manufacturing sectors, fell to 49.3 from 50.2 the previous month, below the 49.8 originally reported and the first negative reading since January 2015.

Markit said that reading was consistent with only a marginal decline in business activity, however.

"February's PMI data highlight a disappointing performance of France's dominant service sector, precipitated by a fall in new business intakes," Markit economist Jack Kennedy said. "A fragile and uncertain economic climate continues to cloud the outlook for the sector, with businesses and consumers reluctant to commit to new spending." Although some panellists said clients had chosen to postpone spending in the face of an uncertain economic environment, Markit said the hotel and restaurant sector was notably weak.

That suggests a continuing impact from the Nov 13 attacks in Paris that killed 130 people in cafes, a stadium and a concert hall and which have driven away tourists from one of the world's most-visited cities.

Highlighting the European Central Bank's struggle to revive price growth in the wider euro area, French service providers slashed prices at the sharpest pace in a year, continuing a trend seen for almost four years now.

One bright spot was employment, with companies in the services sector adding staff for the second month in a row, albeit at timid pace.


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