Financial Schools Reviews

() - French manufacturing confidence eased slightly in June, a key monthly survey suggested, with industry leaders pessimistic about future growth. The performance comes amid concerns of contagion from the sovereign debt crisis in Greece spreading to the rest of the euro area.

Statistics office INSEE’s sentiment indicator fell to 95 from May’s 97. Economists had expected the sentiment index to fall to 96.

Manufacturers’ personal production outlook indicator slumped to -7 from 3. Meanwhile, the general production indicator, which is a gauge of general industrial activity in France, edged down to -4 from -3.

At the same time, the business climate index for the services sector fell to 98 in June from 99 in May. Sentiment in the retail trade sector slid to 101 from 103, while that in the construction sector was unchanged at 93.

The results of a separate survey released by Markit showed that French private sector growth remained strong in June. The purchasing managers’ index stood unchanged at 60.1. A reading above 50 indicates expansion while one below suggests contraction.

The PMI for the manufacturing sector fell to 54.9 in June from 55.8. Economists had forecast a score of 55.1.

Manufacturing output growth eased marginally to its weakest in 10 months, the survey showed. New incoming orders also slowed, with export orders rising at the slowest pace in four months.

French manufacturers reduced payroll numbers at the fastest rate for five months, reflecting the slowdown in demand. Input price inflation remained strong in June due to higher prices of raw materials, while output charges were raised moderately.

Meanwhile, the PMI for the services sector rose to 61.6 in June from 61.4 in May, a 46-month high. Analysts had forecast a score of 60.5.

Jack Kennedy, economist at Markit, said private sector growth was strong enough to produce quarterly GDP growth of around 0.6% in the June quarter. “Moreover, [private sector] employment rose slightly for the second successive month, suggesting improving business confidence and increasing traction in the recovery.”

The French government has announced sweeping spending cuts as part of Europe’s austerity drive. It has pledged to cut spending by EUR 45 billion over the next three years to bring its budget deficit below 3% of GDP.

It also plans to save money through reforms to its pensions and tax systems. The government has already announced that it will raise the retirement age to 62 from 60.

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