France’s private sector output slows in October on weaker service sector, manufacturing strengthens

France’s flash PMI for October showed that the country’s private sector output grew at a somewhat weaker rate due to subdued growth in service sector. This is despite manufacturers increasing production to the greatest degree for more than two-and-a-half years. The Markit Flash France Composite Output Index dropped to 52.2 in October from September’s 15-month peak of 52.7.

Meanwhile manufacturers increased production to the highest since March 2014. The flash Manufacturing Output Index rose to a 31-month high of 52.5 in October from 50.2 in September. On the other hand Services Activity Index dropped to 52.1, a three-month low, from 53.3. The growth in service sector continued to be strong overall. The survey data of October showed that new business placed with France’s private sector firms continued to rise in the month, although at a weaker rate.

Service firms registered a modest growth in new work, while manufacturers recorded negligible growth for the first time since December 2015. Markedly, manufacturers’ new export orders increased to the highest degree recorded by the survey since May 2011.

On the employment front, staffing levels were slightly lower for the fifth time this year so far, noted Markit. Both the sectors showed slight declines in employment. But the drop in manufacturing was the lowest recorded in eight months of job shedding.

In October, business expectations continued to bolster, with the degree of positive sentiment the highest since April. Some panellists were optimistic looking at the latest rises in demand, whereas planned increases in investment and marketing were likely to stimulate the overall activity, stated Markit.