PARIS, Dec 16 (Reuters) - French job creation dropped and activity in the services sector fell to its lowest since May 1998 while consumer prices fell more than expected, data showed on Tuesday in a depressing picture of the economy.
Flash estimates of the Markit/CDAF composite purchasing managers' index (PMI) -- which combines data from services and manufacturing firms -- showed its headline figure falling to 38.4 in December from 41.2 in November.
French non-farm payrolls in the third quarter posted a revised drop of 0.2 percent quarter on quarter, according to national statistics office INSEE.
Separate figures showed that on an EU-harmonised basis prices dropped -0.5 percent month-on-month in November and rose 1.9 percent year-on-year. Energy, food and services prices all dropped on the month.
Analysts had been expecting a monthly fall of -0.3 percent and a rise of 2.1 percent year-on-year.
"The data basically confirm that the real economy is doing extremely badly and that inflation is no issue at all anymore, especially the further declines in the purchasing managers' indices are very, very worrying, especially the very sharp drop now in services," said Holger Schmieding, chief European economist at Bank of America. (Reporting by Anna Willard; editing by Adrian Wright) (Reuters Messaging: anna.willard.reuters.com@reuters.net; +33 1 49 49 5339; anna.willard@reuters.net))