Forexpros – Manufacturing activity in France contracted at the sharpest rate since April 2009 in May, while service sector activity contracted at the same pace from last month, preliminary data showed on Thursday.
In a report, market research group Markit said that its preliminary French manufacturing purchasing managers’ index fell by 2.7 points to a seasonally adjusted 44.4 in May from a final reading of 46.9 in April.
Analysts had expected the index to rise by 0.1 points to 47.0 in May.
A reading above 50.0 on the index indicates industry expansion, below indicates contraction.
Meanwhile, the report showed that service sector activity in France held steady at a seasonally adjusted 45.2 in May, unchanged from April’s reading. Analysts had expected the index to ease up 0.5 points to 45.7.
Lower activity reflected a further marked reduction in new business during May. Panelists commented on weak market demand, lower client activity levels and economic uncertainty as factors leading to the latest fall in new business.
Manufacturers reported a particularly sharp reduction in new orders, with the latest decline the fastest for just over three years. Employment also decreased at a faster pace in May, with the latest drop the sharpest for over two years.
Commenting on the report, Jack Kennedy, Senior Economist at Markit said, “PMI data point firmly towards a contraction in second-quarter GDP following stagnation in Q1.”
Following the release of the data, the euro was flat against the U.S. dollar, with EUR/USD trading at 1.2580.
Meanwhile, European stock markets were higher after the open. The EURO STOXX 50 rose 0.65%, France’s CAC 40 advanced 0.9%, London’s FTSE 100 jumped 1%, while Germany’s DAX gained 0.8%.
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