France’s Private-Sector Growth Picks Up as Services Rebound

A rebound in French services activity drove a pick-up in private-sector growth in the euro area’s second-largest economy in January, Markit Economics said.

A Purchasing Managers’ Index for the industry rose to 50.6 from 49.8 in December, the London-based company said in a statement on Friday. A measure for services and manufacturing climbed to 50.5 from 50.1. A reading above 50 indicates expansion.

“French PMI figures signaled an uneventful start to the year, with the private-sector economy eking out marginal activity growth,” said Jack Kennedy, senior economist at Markit. “Competitive pressures remain strong, with firms cutting their selling prices at the sharpest rate in seven months in a bid to shore up demand, suggesting that inflation is set to remain very weak in the near future.”

Slumping oil and international financial-market turmoil sparked by weaker growth in China are weighing on inflation in France and the euro area. On Thursday, European Central Bank President Mario Draghi held out the prospect of more stimulus as early as March.

French manufacturers reported the fastest drop in input prices in three months in January, reflecting lower costs for key commodities such as oil and steel. Factory activity stagnated last month, Markit said.

Employment in the French private sector increased in January for the first time since June.

President Francois Hollande this week said France faces an “employment emergency” and pledged to address it. Within hours, he was being criticized by economists as doing too little too late to make a dent in an unemployment rate of 10.6 percent, roughly twice that of Germany.

A composite PMI for Europe’s largest economy slipped to

55.1 in January from 55.5, according to a Bloomberg survey of economists ahead of a release at 9:30 a.m. Frankfurt time. A measure for the euro area probably fell to 54.1 from 54.3. That report is due 30 minutes later.

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