French growth defies sluggish Euro activity

ACTIVITY growth in the Eurozone service sector has fallen to a two-year low, according to figures released yesterday.

At 51.5 in August, the area’s Purchasing Managers’ Index (PMI) is down 0.1 on July. A PMI of 50 means no change in activity.

Performance is varying wildly across the continent, though, with Spain and Italy experiencing a contraction in services while the growth is focused in France and Germany, where managers are more confident.

French services PMI increased to 56.8 in August, far above that of the overall region.

Growth in services in the country has been strong enough to offset declines in industry, leading some economists to predict third quarter growth despite the economy flat-lining from April to June.

That may not reassure less fortunate Eurozone states, though – including Germany, where service PMI fell to 51.1.

“France continues to have a significant edge over Germany in that sector in terms of economic momentum,” according to Francois Cabau at Barclays Capital. More broadly, “outstanding and new businesses are in contraction territory,” he warned.