French Manufacturing, Services Reveal Risk for Europe’s Recovery

French manufacturing and services contracted for a second month in June, highlighting the euro area’s struggle to sustain its economic recovery.

A Purchasing Managers Index for both industries in the region’s second-largest economy decreased to 48.0 from 49.3 in May, Markit Economics said today in London. Economists had forecast an unchanged reading, according to a Bloomberg News survey. A reading of 50 or higher signals expansion.

The French economy has fared worse than that of the euro area for the past three quarters and added to concern of policy makers at the European Central Bank, who unveiled unprecedented stimulus earlier this month to rekindle growth and boost prices in the 18-nation region. The International Monetary Fund gave a bleak assessment of the euro economy last week, noting that output is still below pre-crisis levels, unemployment “unacceptably high” and inflation “worryingly low.”

“There remained little sign of any turnaround in the performance of France’s economy at the end of the second quarter,” said Paul Smith, senior economist at Markit. “On these trends, the economic underperformance of France seems set to persist well into” the second half of the year, he said.

The manufacturing PMI fell to 47.8 from 49.6 in May, the lowest level since December, while the one for services slipped to 48.2 from 49.1.

Markit will release data for Germany, Europe’s biggest economy, at 9:30 a.m. Berlin time. Its report for the euro area is due at 10 a.m. Economists predict the currency bloc’s factory index will remain unchanged at 52.2, with the services gauge rising marginally to 53.3 from 53.2.

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