RTTNews - French private sector economy grew for the first time in fifteen months in August with manufacturing showing expansion, a report by Markit Economics said Friday.
The Markit/CDAF flash composite output index rose to 50.9 in August from 47.3 in July.
A reading above 50 indicates expansion, while a reading below 50 signals contraction. The index stood above 50 for the first time in fifteen months.
The purchasing managers' index or PMI for the manufacturing sector rose to a 15-month high of 50.2 in August, signaling expansion, from 48.1 in July. Economists had expected a reading of 49.
Similarly, manufacturing output index reached an eighteen month high of 54.4, up from 50.5 in July.
Meanwhile, the services PMI climbed to an 11-month high of 48.9 in August from 45.5 in July. Economists were looking for a reading of 46.3. Services sector continued to shrink, though business expectations rose to a 19-month high on improving economic outlook.
Input prices dropped for a tenth consecutive month in August, while a sharp decline in private sector employment was witnessed.
Jack Kennedy, economist at Markit, said, Although recent developments are undoubtedly positive, the pace and sustainability of future growth are open to question as falls in inflation begin to unwind, government stimulus measures fade and the labor market continues to weaken.
The French economy unexpectedly grew in the second quarter on higher government spending and global demand, ending four straight quarters of economic contraction. The economy grew 0.3% sequentially in the second quarter, after shrinking 1.3% in the first three months of the year. This surprise growth was partly due to the narrowing of the foreign trade balance.
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