French factory activity slows slightly in August - PMI

Reuters
Employees work on ballerinas 'Cendrillon' at the production workshop in the Repetto factory in Saint-Medard d'Excideuil, southwestern France
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Employees work on ballerinas 'Cendrillon' at the production workshop in the Repetto factory in Saint-Medard d'Excideuil, southwestern France, July 11, 2013. REUTERS/Regis Duvignau

PARIS (Reuters) - French manufacturing activity shrank only slightly in August as the sector comes close to shaking off an 18-month slump, a survey showed on Monday.

Data compiler Markit said its final purchasing managers' index was unchanged in August from a preliminary reading of 49.7, which also marked no change from July's figure.

The reading was just below the 50-point line dividing expansions in activity from contractions. It has not been at that level since February 2012.

New orders fell at their slowest pace since mid-June 2011, while managers' purchasing activity also fell at a slower rate, in a sign firms in the euro zone's second-biggest economy are seeing improved demand.

"Overall, the latest data suggest that the manufacturing sector is starting to hold its ground a little better having been under the cosh in recent times," Markit senior economist Jack Kennedy said.

France's 2 trillion euro (1.67 trillion pounds) economy posted faster-than-expected growth of 0.5 percent in the second quarter, ending a short, shallow recession.

Though recent data have painted an improving outlook, questions remain about whether economic momentum can produce any more than a gradual recovery.

The official INSEE statistics agency said on Thursday that industrial morale reached its strongest level in August since late 2011, although executives signalled in a survey that investment was likely to fall this year by 6 percent from 2012.

(Reporting by Leigh Thomas; Editing by Hugh Lawson)

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