French Economy Gathers Pace as Services Outpace Manufacturing

  • Composite PMI rises to the highest level since June 2011
  • ‘The French private sector continued to grow at a solid rate’

Economic momentum in France accelerated to the strongest in more than five years in January, data by IHS Markit show.

A Purchasing Managers’ Index for manufacturing and services rose to 53.8 from 53.1 in December, the London-based company said in a statement on Tuesday. That’s above the 53.2 median estimate in a Bloomberg survey and the highest since June 2011.

“The French private sector continued to grow at a solid rate in January,” said Alex Gill, an economist at IHS Markit. “The expansion was broad-based with marked increases in output evident in both the manufacturing and service sectors, driven by firm underlying client demand. In turn, this filtered through into the labor market.”

France’s economic recovery has lagged that of the euro zone in recent years, leaving unemployment stuck at about 10 percent and hampering the ability of President Francois Hollande to trim the budget deficit. The lack of growth and job creation were among the reasons why the Socialist last month became the first French leader in half a century not to seek re-election after one term.

In January, private-sector employment rose for a third month, with manufacturers reporting the strongest rate of increase, according to the data. Companies maintained a positive outlook toward activity over the next year, as orders gained for a seventh month.
A gauge for services rose to a 19-month high of 53.9 in January, while the manufacturing index slipped to 53.4 from 53.5.

Germany’s composite PMI is forecast to improve to 55.3 from 55.2, and a measure for the euro area probably rose to 54.5 from 54.4. Those reports are due at 9:30 a.m. and 10 a.m. Frankfurt time, respectively.

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