A strong rebound in orders pushed French manufacturing activity to its highest level in three months in August, a survey showed today.
The Markit final factory purchasing manufacturers' index (PMI) rose to a three-month high of 55.1 in August from 53.9 in July, comfortably exceeding a flash estimate of 54.7.
Activity rebounded from July's 10-month low and stayed well above the 50 mark separating growth from contraction, suggesting economic recovery remained on track as consumer spending on manufactured goods held up.
"Stronger domestic demand boosted the French manufacturing sector in August, as new orders rose at the fastest pace in four months," said Jack Kennedy, Markit economist.
France's manufacturing sector has been expanding for more than a year now, and the acceleration in August will add weight to the view of some economists that France, which makes up just over a fifth of the euro zone economy, and regional heavyweight Germany are decoupling from peripheral southern European
countries. French economy minister Christine Lagarde has also emphasised that view.
The PMI's new orders sub-index jumped to 58.0 from July's 54.5, its highest level since April, and ahead of a flash estimate of 57.3, fuelled mainly by domestic demand.
Export orders continued to rise, though the pace of expansion was the weakest since December 2009.
The rise in new orders underpinned an increase in output for a 14th consecutive month: the output sub-index rose to its highest level since April at 57.3, versus 56.7 points in July and an initial flash estimate of 57.1 for August.
With capacity pressures persisting in manufacturing, the backlog of orders rose again, but at a slower pace than in July.
Faster sales growth meant a marked contraction in manufacturers' stocks of finished goods and post-production inventories fell at the fastest pace in seven months.
"However, cost pressures in the manufacturing sector remained strong in August amid rising raw material prices, while competitive pressures prevented many firms from passing on higher costs to customers," Mr Kennedy said.
Job losses also continued for a 28th straight month, but the rate was only marginal and the lowest since May. Ms Lagarde said recently she believed unemployment was "stabilising" after the number of job seekers declined nationally by 14,400 in July.
Reuters