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French services growth slows after Paris attacks
[PARIS] Growth in the French services sector has slowed in the wake of the Nov 13 attacks in Paris, although a faster increase in manufacturing activity has helped keep the private sector expanding, a survey showed on Monday.
Private sector activity has increased for the 10th straight month, with the flash composite Purchasing Managers Index (PMI) for November coming in at 51.3 for the manufacturing and services sectors combined, down from 52.6 in October, survey compiler Markit said.
The flash reading for the dominant services sector fell to 51.3 in November versus 52.7 in October, around the levels seen over the summer. Any reading above 50 signals expansion. "We think the key reason for the slowing in services growth is due to the attacks," Chris Williamson, Markit's chief economist said.
Some 60 per cent of survey responses from companies in the services sector and 52 per cent in the manufacturing sector were received after the attacks that killed 130 people in cafes, a concert hall and a soccer stadium last Friday, Markit said. "Clearly there's been a cut in footfall and any sort of feel-good factor amongst consumers in the wake of the horrific events," Williamson said. "But history does tell us that these events tend to have a very short-lived impact," he said.
On a more positive note, the manufacturing index rose to 50.8, the highest since April 2014, from 50.6 the previous month. "The rest of the survey data points to a more encouraging picture of France continuing to lift itself out of its gloom,"Markit's Williamson said.
Business surveys have shown a gradual improvement in French economic activity over the last few quarters, but last week's attacks will probably weigh on the tourism and retail industries in the fourth quarter.
Markit's subindex for business expectations in the services sector dipped to 59.1 in November from 59.9 in October but remains comfortably in expansion territory.
On the employment front, however, companies in the services sector shed jobs at a faster pace in November, with the employment sub-index falling to 49.2 from 49.9 the month before.
The outlook for jobs was brighter in manufacturing, with the subindex rising to 49.5 from 47.9 in October. But French manufacturers have been reducing headcount for 20 consecutive months now. "In some ways that's disappointing, but if you look at the bright side of that, a lot of it is companies restructuring, trying to be more efficient, more productive," Mr Williamson said. "Hopefully this is a case of short-term pain for longer-term gain," he said.