Service sector drives growth of French economy in July
Staff Writer |
At 54.5 in July, down from 55.0 in the previous month, the IHS Markit Flash France Composite Output Index remained above the crucial 50.0 nochange mark for a twenty-fifth month in a row.
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Although down since June, the index remained strong in the context of the series history.
Growth remained broad-based across the manufacturing and service sectors, albeit noticeably sharper in the latter.
Service providers recorded a twenty-fifth consecutive expansion in business activity, buoyed by a further rise in new orders.
Robust economic conditions and the football World Cup were cited as factors contributing to growth.
The rate of increase eased slightly from June but remained marked overall.
Manufacturers also noted a rise in output during July.
The rate of increase quickened from June but remained moderate and among the weakest in the current 23-month sequence of expansion.
Although new orders rose, manufacturing exports were down for the first time since September 2016 amid reports that global trade tensions was hampering foreign demand.
Capacity pressures facing French private sector firms continued during June, extending the current sequence of backlog accumulation to 29 months.
That said, the rise was centred on service providers, as manufacturers registered a decline for the first time since June 2016.
Rising overall workloads encouraged private sector firms to take on additional workers for the twentyfirst successive month in July.
The rate of job creation remained far sharper than the long-run series average, despite softening from June.
Service providers registered a slower gain in jobs, while the rate of growth was unchanged at manufacturers.
Average input costs faced by French private sector firms rose in July, thereby continuing a trend that has been observed since March 2016.
The rate of inflation eased slightly from June but remained above the long-run series average.
Manufacturers continued to record a sharper rate of increase than their service sector counterparts.
Higher raw material costs, including oil, plastics, paper and steel as well as greater transport costs all contributed to strongest inflation for five months.
In line with higher cost burdens, private sector firms upped their average selling prices in July.
The increase was broad-based across the manufacturing and service sectors.
As was the case with input costs, the rate of inflation was sharper at manufacturers.
Finally, French companies retained an optimistic outlook with regard to coming 12-month period in July, buoyed by hopes of further demand growth.
The degree of optimism ticked up from June and remained strong. ■