French services slump eases further in August - PMI

PARIS (Reuters) - France's services sector shrank in August at its slowest pace in a year as business expectations rose to their highest level in 15 months, a survey showed on Wednesday.

The final purchasing managers index for the services sector rose to a 12-month high of 48.9 last month from 48.6 in July, survey compiler Markit said.

The improvement brought the index within a point of the 50-point threshold between contractions in activity and expansions. The sector was last above that line 17 months ago.

The composite PMI index that gives a reading for the whole private sector including both services and manufacturing activity slipped to 48.8 from 49.1 the previous month.

The last time the composite index showed an expansion was in February 2012.

A subindex gauging business expectations in the service sector rose to its highest level since May 2012.

"The downturn in French services activity eased further in August, moving the sector closer to stabilisation," Markit senior economist Jack Kennedy said in a written comment.

"An improvement in service providers' future expectations to the highest for over a year provides further positive news, although the overall picture remains far from rosy."

France's 2 trillion euro ($2.6 trillion) 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.

On the employment front, the poll suggested that hiring trends were nearing stabilisation, with the index at its highest level in 16 months.

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(Reporting by Nicholas Vinocur; Editing by Hugh Lawson)