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French Services Sector down in Feb.

Thursday, February 21 08:03:56

French service sector activity shrank in February at its fastest rate in nearly four years, a survey showed today, suggesting the euro zone's No. 2 economy is far from the turnaround emerging elsewhere in the bloc.

The Markit flash purchasing managers' index (PMI) for private sector services came in at 42.7 for February, down from 43.6 last month and hitting its lowest since February 2009, when France was suffering the worst of the global financial crisis.

A corresponding index for the manufacturing sector rose to a two-month high of 43.6 from 42.9 in January.

Both indexes remain well below the 50 point line dividing a contraction in activity from expansion.

"There is a fairly consistent picture showing that the French business sector is suffering its worst downturn since the height of the financial crisis," said Chris Williamson, chief economist at Markit.

Markit's composite PMI index, covering activity in the services and manufacturing sectors combined and accounting for roughly two-thirds of French economic output, fell to 42.3 from 42.7 in January, also its lowest level in nearly four years.

Williamson said French exporters were benefiting from a broader euro zone upswing. Data from the INSEE statistics office on Wednesday showed a pickup in industry morale.

The rate of job shedding in the private sector slowed slightly but remained solid in February, marking the 12th consecutive month of falling employment.

Overall, the surveys pointed to a 0.7 percent contraction in GDP for the first quarter of 2013, placing France's economy on the same playing field as Spain and Italy - and not Germany, which recent data suggests is picking up momentum.

After contracting 0.3 percent in the final three months of 2012, the French economy was seen shrinking by 0.1 percent in the first quarter, a Reuters poll of 24 economists showed. ( C) Reuters