By Vicky Buffery
PARIS, May 4 (Reuters) - The pace of decline in French manufacturing activity continued to ease in April, a key survey showed on Monday, adding to recent evidence of a stabilisation in the euro zone's second-largest economy.
The Markit/CDAF manufacturing purchasing managers' index (PMI) rose to 40.1 in April, rebounding sharply from March's final reading of 36.5 to its highest level since October last year.
A figure below 50 still indicates that the manufacturing sector is contracting, but April saw the second consecutive monthly improvement in the index, raising hopes that the stranglehold of global recession may now be easing.
"A further easing in the manufacturing sector's decline suggests that the most intense phase of adjustment may be over," said Jack Kennedy, economist at Markit Economics."
The sub-index for factory output climbed to 38.9 in April from 34.1 the previous month, as production declined at its slowest rate since September.
The reading for new orders also jumped to 41.1 from 34.3 in March, and some of the firms surveyed reported a pick-up in demand from clients who had run down their stock levels.
"It is likely that industrial production and GDP will show slower falls from Q2 onwards as inventories reach their nadir," said Kennedy.
There was also evidence of higher sales to clients in emerging countries, Markit said, which helped to slow the pace of decline in new export orders.
Other indicators published recently have shown similar positive signals, adding to the sentiment that the French economy may no longer be in freefall.
Household spending on manufactured goods rose by a stronger-than-expected 1.1 percent in March, after a 1.8 percent fall in February, while April's consumer confidence index improved for the second successive month.
Even so, economists have cautioned against reading too much into the indicators, stressing that the economy is stabilising at an extremely low level and mounting unemployment looks set to drag on any nascent recovery.
Data released for France last Monday showed headline unemployment rising by 63,400 to 2,448,200 in March, and April's PMI survey signalled further bleak news to come as firms continued to slash jobs over the month.
"Despite easing to its slowest in 2009 so far, the rate of decline (in employment) remained close to January's survey record," Markit said.
The employment sub-index stood at 37.0 for April, only marginally higher than the record series low of 35.8. (Editing by Andy Bruce)