November 4, 2013 / 9:00 AM / 6 years ago

French factory activity shrinks faster in October: PMI

PARIS (Reuters) - French manufacturing activity shrank for the 20th month in a row in October, and at a faster pace, as new orders saw their sharpest drop since June due to poor demand, a survey showed on Monday.

Coils of steel are seen at the ArcelorMittal Factory in Florange, Eastern France, October 18, 2013. REUTERS/Vincent Kessler

Data compiler Markit said its final purchasing managers’ index fell to 49.1 in October after climbing to 49.8 in September, just below the 50 point line dividing expansions in activity from contractions.

Export orders were the one positive note in October, rising for the third time in the past four months and at the fastest rate since May 2011.

The final reading missed an initial flash figure and the consensus forecast of analysts, which both came in at 49.4.

Production continued to fall as businesses kept using up their stocks of finished goods, while employment in the sector fell for a 20th month.

“The French manufacturing sector remained in contraction at the start of the fourth quarter, with output, new orders and employment all showing further (albeit modest) declines,” Markit economist Jack Kennedy said.

“Overall though, the data point to a sector continuing to struggle in the face of persistently weak economic conditions.”

The preliminary reading last week of Markit’s composite PMI index for October, which includes both the manufacturing and services sectors, had shown French business activity stagnating, in contrast to September when there was growth for first time since early 2012.

The euro zone’s second-largest economy shook off a shallow recession in the second quarter with better-than-expected growth of 0.5 percent, but French national statistics office Insee forecasts a flat third quarter.

- Detailed PMI data are only available under license from Markit and customers need to apply to Markit for a license.

Reporting By John Irish; Editing by Hugh Lawson

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