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French private sector activity keeps growing in October as hiring picks up: PMI

PARIS (Reuters) - French private sector activity grew for a second straight month in October, and at a brisker pace than initially reported, as employment rose for the first time in more than 1-1/2 years, a poll showed on Wednesday.

Data compiler Markit's composite PMI index of manufacturing and services came in at 50.5, the same as September's final reading but higher than a "flash" estimate of 50.1 and holding above the 50 point line denoting expansion.

A report earlier this week showed activity was still shrinking among manufacturers, but the latest data showed French services sector activity grew, with a PMI reading of 50.9, just below September's 51.0 but comfortably above a flash reading of 50.2.

"The latest data provide some moderately encouraging signs for France's dominant service sector at the start of Q4," said Markit economist Jack Kennedy.

"Activity growth was sustained for a second consecutive month in October, albeit at a marginal pace, while employment rose for the first time in 1-1/2 years."

A subindex in the survey showed recruitment in the private sector grew in October for the first time since February 2012, with a composite reading covering both manufacturing and services of 50.4 in October, up from September's 49.6.

It was the first reading above 50 since February 2012.

Prices commanded by companies fell more despite a continued rise in materials or other input costs, suggesting that price competition and profit margins remain under pressure even if the news on the jobs front offers some comfort to the left-wing government of President Francois Hollande.

Hollande has promised to halt the rise in unemployment by the end of the year despite what at best looks like a slow recovery from the recession of early 2013.

His government, which took power in mid-2012, is predicting economic growth of just 0.1 percent this year and 0.9 percent next year.

The European Commission said on Thursday it expected growth of 0.2 percent this year and 0.9 percent in 2014 although a recent Reuters survey of economists suggested a slightly weaker pickup in 2014 with an average forecast of 0.7 percent growth.

(Reporting By Brian Love; Editing by Hugh Lawson)