PARIS, (Reuters) – France’s private sector struggled to keep up momentum in November as manufacturing activity softened in the face of falling new orders, a monthly survey showed on Friday.
Data compiler IHS Markit said its preliminary composite purchasing managers index (PMI) fell marginally to 54.0 from 54.1 in October, slightly better than economists average forecast for 53.9 in a Reuters poll.
Though overall business activity remained comfortably above the 50-point threshold between an expansion and a contraction, there was a growing divergence between the services and manufacturing sectors.
Manufacturing activity eased ever closer towards contraction at only 50.7 from 51.2 in October, and a touch below economists’ average forecast for 51.0.
Meanwhile, in the larger service sector, PMI eased back to 55.0 – spot on expectations – from 55.3 in October, though IHS Markit chief economist Chris Williamson said the sector’s vigour may not hold at those levels for much longer.
“Service companies are struggling to find an pricing power amid relatively sluggish demand, which is being driven by the weakness in manufacturing,” Williamson said.
“Services are resilient at the moment, but there are downside risks to that, and it’s manufacturing that is clearly the key area of concern,” he added.
New factory orders and hiring in the manufacturing sector contracted in November for the first time in more than two years with export demand softened amid international trade tensions.
Less exposed to foreign demand, the service sector managed to keep up growth by holding down price increases much lower than their input prices, pinching margins.
Hiring growth in the sector, which has been leading a labour market recovery as France’s biggest employer, eased to the slowest pace since August 2017.
- Detailed PMI data are only available under licence from IHS Markit and customers need to apply for a licence.
(Reporting by Leigh Thomas; Editing by Toby Chopra)