French business activity close to stagnation in October - PMI


PARIS (Reuters) - French business activity all but stagnated in October after growing for the first time in 19 months in September, a survey showed on Thursday.

France's composite purchasing managers index (PMI), covering more than 70 percent of the economy, slipped to 50.1 from 50.5 in September, data compiler Markit said.

The services sector index fell to 50.2 from 51.0 in September, confounding analysts' forecasts for further growth to 51.3.

The manufacturing sector PMI fell further below the 50 threshold that divides expansion from contraction. The 49.4 reading undershot September's final reading of 49.8 and analysts' consensus forecast this month of 50.1.

The manufacturing output index, however, rose to a four-month high and business expectations were at their highest level since May 2012, with respondents citing tentative signs of recovery and better confidence among clients.

"The French private sector economy delivered a flat performance at the start of the fourth quarter as a slower fall in manufacturing output offset a softer showing from the service sector," said senior Markit economist Jack Kennedy.

The euro zone's second-largest economy pulled itself out of a shallow recession in the second quarter with stronger-than-expected 0.5 percent growth. The government now forecasts 0.1 percent growth for this year and 0.9 percent for 2014.

"We're looking at barely any growth really, running at a level consistent with 0.1 percent GDP growth in the third quarter and at the start of the fourth quarter," said Markit chief economist Chris Williamson.

"We need to see the PMI lift higher to get anything more than that meagre growth rate."

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(Reporting by Ingrid Melander and Leigh Thomas; Editing by Hugh Lawson)

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