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French Sept flash PMIs point to stronger recovery

Published 09/23/2009, 03:00 AM
Updated 09/23/2009, 03:03 AM

By Vicky Buffery

PARIS, Sept 23 (Reuters) - French private sector activity grew at its fastest pace in a year and a half in September, a key survey on Wednesday showed, in a sign that the recovery is gaining traction in the euro zone's second-largest economy.

The Markit/CDAF flash composite purchasing managers' index (PMI), which combines data from both the manufacturing and services sectors, rose to 53.9 in September from 51.3 in August, reaching its highest level since April 2008.

This was the second consecutive month that the index has remained above the 50 mark separating growth from contraction.

Encouragingly, September's survey also showed a broadening of the upturn as the services sector finally saw a return to growth, taking the PMI to 52.2 compared to 49.9 in August.

Meanwhile, the manufacturing sector expanded for a second month, pushing the PMI to 52.5 from 50.8 previously.

"Growth of the French economy gathered momentum in September, with the service sector returning to expansionary territory for the first time in a year and manufacturing output rising at a robust pace," said Jack Kennedy, chief economist at Markit.

The French economy confounded expectations by growing 0.3 percent in the second quarter of the year, and economists have questioned whether the recovery trend can prove sustainable.

Concerns have notably focused on rising unemployment, which could curtail consumption in the months ahead.

But September's PMI data offered encouraging signs for the short-term, as demand continued to improved, driving the composite new orders index to 55.1 from 51.6 previously.

In the manufacturing sector in particular, new orders rose at their fastest pace in nearly three years.

Export orders also climbed at their sharpest rate since February 2007, raising hopes that increased global demand could help to offset any falls in domestic consumption.

In the services sector meanwhile, the business expectations index climbed to 74.0 in September from 69.0 previously, reflecting the anticipation of continued recovery and imrpoved market conditions, Markit said.

Unemployment reamined a bleak spot, as firms surveyed said they continued to cut jobs over the month, in ongoing efforts to cut costs and restructure.

But Kennedy sounded a note of optimism over the outlook.

"Employment is traditionally a lagging indicator and, if the upturn is sustained, job losses may begin to abate by the end of the year." (Reporting by Vicky Buffery; Editing by Andy Bruce)

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