French Manufacturing Propels Economic Growth as Services Slow

• French Manufacturing Propels Economic Growth as Services Slow

French manufacturing unexpectedly expanded at the fastest pace since 2011, underpinning a recovery in the euro area’s second-largest economy that was long in the making.

A Purchasing Managers’ Index for the industry rose to 55.8 in August from 54.9 in July, according to IHS Markit. Economists surveyed by Bloomberg predicted the gauge would signal a slowdown in factory activity. A PMI for services fell to a seven-month low of 55.5.

The French economy is enjoying its strongest continuous expansion since 2011 — finally catching up with its European peers — after the election of Emmanuel Macron as president bolstered sentiment. The Labor Ministry is set to give unions a preview this week of its plans to overhaul the employment market.

“The data are particularly promising for the manufacturing sector, with output and new order growth at multi-year highs,” said Alex Gill, an economist at IHS Markit. “With capacity pressures intensifying, signs are that unemployment will continue to decline in the third quarter.”

A composite PMI for French manufacturing and services remained at 55.6 in August.

A gauge for Germany due at 9:30 a.m. Frankfurt time probably also held at its July reading. Economists predict a PMI for the euro area will slip to 55.5 from 55.7. That data is due at 10 a.m.