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French manufacturing PMI improves, Services PMI tumbles

Published 04/23/2012, 03:08 AM
EUR/USD
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Investing.com - Manufacturing activity in France improved more-than-expected in April, while service sector activity contracted at the sharpest pace in six months, preliminary data showed on Monday.

In a report, market research group Markit said that its preliminary French manufacturing purchasing managers’ index rose by 0.6 points to a seasonally adjusted 47.3 in April from a final reading of 46.7 in March.

Analysts had expected the index to rise by 0.5 points to 47.2 in April.  

A reading above 50.0 on the index indicates industry expansion, below indicates contraction.

Meanwhile, the report showed that service sector activity in France fell unexpectedly by 3.7 points to a seasonally adjusted 46.4 n April from a final reading of 50.1 in March. Analysts had expected the index to ease up 0.1 points to 50.2.

The deterioration in the headline index reflected a much weaker performance by the service sector, where activity was down for the first time in five months during April.

Manufacturers reported a further fall in output, although the pace of decline eased during the latest survey period.

Commenting on the report, Jack Kennedy, Senior Economist at Markit said, “A worrying drop in service sector activity during April, combined with ongoing fragility in manufacturing, signals that the French economy started Q2 on a weak footing.”

“Underlying demand continues to appear subdued at best, and a fall in service sector confidence regarding the year-ahead outlook only adds to the sense that business conditions are set to remain tough,” he added.

Following the release of the data, the euro held on to losses against the U.S. dollar, with EUR/USD shedding 0.41% to trade at 1.3164.

Meanwhile, European stock markets were sharply lower after the open. The EURO STOXX 50 fell 1.6%, France’s CAC 40 tumbled 1.45%, London’s FTSE 100 declined 0.8%, while Germany's DAX dropped 1.45%.

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