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French Nov services PMI edges up, orders growth slows

Published 12/03/2010, 03:50 AM
Updated 12/03/2010, 03:52 AM

* New business growth slowest in 15 months

* Pace of hiring picks up

* Consumer spending seen as key to stronger recovery

By Leigh Thomas

PARIS, Dec 3 (Reuters) - France's service sector recovery gained momentum in November despite slower growth in new orders as business returned to normal following a series of strikes and protests in October.

The final Markit services purchasing manager's index (PMI), which measures activity at firms from hotels to hauliers, edged up to 55.0 from 54.8 in October.

The composite PMI, which measures activity in both the services and manufacturing sectors, rose in November to 56.4, bouncing back from a 13-month low of 54.9 in October.

Service providers reported faster activity after strikes and demonstrations drove the service-sector index down to a 7-month low in October as unions tried unsuccessfully to prevent the government from pushing through pension reform.

"Although activity growth picked up slightly in November, slower rises in new business and backlogs suggest a weakening underlying trend in the service sector approaching the end of the year," Markit economist Jack Kennedy said.

Growth in new work was the weakest in 15 months, but the pace of hiring accelerated nonetheless, companies reported.

"Across both services and manufacturing, growth appears to be primarily business-led at the moment and we need to see a stronger contribution from the consumer to keep recovery on track in the coming months," Kennedy said.

However, it may be a while before household consumption begins driving the recovery after figures last week showed a weak start to the fourth quarter with a 0.7 percent fall in consumer spending on manufactured goods in October.

French gross domestic product growth slowed to a lower-than-expected 0.4 percent between July and September, from a 0.7 percent rise in the second quarter as stimulus from companies rebuilding their stocks began to wane.

However, earlier this month Economy Minister Christine Lagarde said she expected France's fourth quarter GDP growth to be better than the third quarter, as a stabilising labour market helped buoy domestic demand. (Reporting by Leigh Thomas; editing by Stephen Nisbet)

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