Euro industrial growth muted by French firms

FRENCH industry is still lagging behind the Eurozone’s modest recovery, while Spain’s manufacturers are reporting the strongest growth in more than four years.

Markit’s purchasing managers’ index (PMI) for the currency bloc showed another month of slow growth in May, which nonetheless marks a solid improvement from the recession that ended last year. The score for the euro area as a whole was 52.2, above the neutral 50 level.

France’s PMI is still the lowest of any of the individual countries recorded, with a score of 49.6. It is now the last country in which the manufacturing sector is indicating contraction. Spanish and Italian industrialists are among the most positive in the region, with scores of 52.9 and 53.2 respectively.

Greek manufacturers also signalled a welcome expansion again in May, the fourth during the last five months, with a score of 51.

“The former crisis countries are gradually developing into the new stability anchors of Eurozone output growth,” said Christian Schulz of Berenberg bank.

“Meanwhile France and Germany dragged the overall index down, albeit for probably very different reasons. While the Ukraine crisis has been dampening German exporters’ sentiment since March, French companies have reverted to their vote of no confidence in the socialist government,” he added.

France was also the only country to indicate further job cuts, with the employment portion of the PMI figure rising in Germany, Spain, Italy, Austria, the Netherlands and Greece.

At just 52.3, Germany’s figure was the lowest in seven months, but remains above-average for the index as a whole.

“Without any clear cause, the slowdown in the region’s largest economy will perhaps be the biggest concern for the Eurozone’s growth trajectory if a rebound is not forthcoming in June,” said Markit chief economist Chris Williamson.