French business activity slows sharply: PMI index

Friday, 24 June 2011 00:01 -     - {{hitsCtrl.values.hits}}

PARIS, (AFP) - Business activity in France slowed down sharply in June to an eight-month low reading, an initial estimate from the Markit purchasing managers’ index showed on Thursday.

The PMI index is watched as an important leading indicator of performance of the economy.

The index for June stood at 55.4 points from 60.3 points in May, the lowest level for eight months, the Markit firm which produces the index said.

Private French businesses questioned for the report “signal a strong slowing of growth of activity in June,” Markit said.

The slowdown was noted in the services sector as well as in manufacturing.

“Service providers see the weakest increase in their activity for six months, with the rate of expansion dropping off strongly from the level in May, while manufacturers report the weakest increase of their production since July 2009,” Markit said.

Even though the outlook for activity by service providers over the next 12 months was positive, “optimism shown by companies is at the lowest level for 23 months and remains below the historic level of this index,” it said.

Markit economist Jack Kennedy said: “The PMI figures for the whole of the second quarter are in line with a slight strengthening of expansion in relation to growth of 1.0 percent of gross domestic product registered in the first quarter.

“But the strong slowdown in June raises concern about the resilience of French growth in the second half.”