• Markit’s composite PMI falls to 49.4, signaling contraction
  • Manufacturers report sixth consecutive drop in new orders

France’s private-sector economy shrank for the first time in four months in June, with manufacturing slumping the most in more than a year.

A composite Purchasing Managers’ Index fell to 49.4 from 50.9 in May, London-based Markit Economics said Thursday. That’s below the 50-point mark that divides expansion from contraction. A gauge for manufacturing dropped to 47.9, while a measure for services fell to 49.9.

“A renewed fall in new business was behind the decline, with respondents highlighting the difficulty of securing work amid a fragile demand environment,” said Jack Kennedy, senior economist at Markit. “A flagging manufacturing sector was again the main source of weakness.”

The tussle between President Francois Hollande’s Socialist government -- which plans to ease employee protections -- and the country’s most strident labor unions has caused major disruptions in public transportation, gasoline supplies and garbage collection in the euro area’s second-largest economy. Economists predict growth will slow to 0.3 percent this quarter from 0.6 percent in the first, according to a Bloomberg survey.

French manufacturers reported a sixth consecutive drop in new orders, while services firms’ business expectations fell to a six-month low, Markit said. Survey respondents mentioned the difficult social climate and economic uncertainty, according to the report.

A separate gauge of French business confidence by the National Statistics Office Insee unexpectedly fell to the lowest level in nine months.

Markit’s German composite index slipped to 54.1 from 54.5. A euro-area gauge is also predicted to decline.

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