French private sector output slips into contraction in February

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Investing.com - French private sector activity grew at the slowest pace in more than a year in February, underlining concerns over the economic outlook of the euro zone's second largest economy, preliminary data showed on Monday.

Markit said that its seasonally adjusted Flash France Composite Output Index, which measures the combined output of both the manufacturing and service sectors declined from 50.2 in January to 49.8 in February, the weakest in 13 months and missing forecasts for 50.3.

The preliminary services purchasing managers' index fell to a seasonally adjusted 49.8 this month. The reading came in below expectations for 50.3 and down from 50.3 in January.

In contrast, the French manufacturing purchasing managers' index inched up to a seasonally adjusted 50.3 this month, beating expectations for 49.9 and up from 50.0 a month earlier.

A reading above 50.0 on the index indicates industry expansion, below indicates contraction.

Service providers signalled the first drop in new work for 15 months, while manufacturers reported a second successive monthly fall in new orders, in part reflecting a further decline in export sales.

Commenting on the report, Jack Kennedy, Senior Economist at Markit said, "The private sector economy continues to follow a broadly stagnant path, with first-quarter GDP looking likely to remain sluggish following a 0.2% rise at the end of 2015."

EUR/USD fell to 1.1086 from around 1.1089 ahead of the release of the data, while EUR/GBP was at 0.7802 from 0.7806 earlier.

Meanwhile, European stock markets were higher after the open. France's CAC 40 tacked on 1.3%, the EURO STOXX 50 rose 1.5%, Germany's DAX added 1.35%, while London's FTSE 100 inched up 1%.

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