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)