France economy back to growth

The French economy grew in February for the first time since October, according to a survey by S&P Global. The company’s flash reading for the purchasing managers’ index (PMI) for the French services sector rose to 52.8 points in February, up from 49.4 in January. Analysts had expected a reading of 49.9 points. A PMI figure above 50 indicates expansion in activity. Meanwhile, the PMI figure for the French manufacturing sector fell to 47.9 points in February from 50.5 in January, below forecasts for 50.8 points.

However, the overall flash February composite PMI figure for France, which includes both the services and manufacturing sectors, rose to 51.6 points from 49.1 in January, exceeding forecasts for a reading of 49.9 points. S&P Global said that the findings for the euro zone’s second biggest economy indicated a moderate expansion in employment and a decrease in inflation.

Official data revealed last week showed unemployment in France declined to an almost 15-year low in the final three months of 2022, and French Finance Minister Bruno Le Maire has said he expects inflation to ease from the middle of this year onwards. The flash figure for the French composite PMI also reached a seven-month high, marking the first time that this index had been in the expansion territory since October, according to S&P Global.

One expert said that the February flash PMI survey results for France were positive. However, it is unclear if the French economy is now on the path to recovery, given that the manufacturing sector downturn intensified in February, and demand conditions within this sector are still fragile. Hayes cautioned that while the figures looked positive at face value, there are still potential challenges ahead.