France’s economic recovery showed signs of strengthening this month after recording the fastest pace of growth in almost two years in the first quarter.
Surveys by Markit Economics showed services expansion accelerated and a slump in manufacturing eased to the least in a year. A composite index of both industries rose to 51 from 50.6 in April, above the 50 mark that divides expansion from contraction for a sixth month. The reading was in line with the median forecast of economists surveyed by Bloomberg.
With cheaper oil and a weaker euro providing a boost to consumers and businesses, the French economy expanded 0.6 percent in the first three months of the year, beating the euro-area average. The International Monetary Fund said this week that the country’s recovery is “solid” for now, though President Francois Hollande needs to push through further reforms in order to secure prosperity and cut unemployment.
“We see a solid short-term recovery,” IMF French mission chief Christian Mumssen told journalists in Paris May 19. “Continued efforts are needed to tackle France’s fundamental economic problems.”
The euro strengthened after the data and was trading at $1.1117 as of 8:05 a.m. London time, up 0.2 percent on the day.
Finance Minister Michel Sapin says the government aims for an annual pace of growth of 1.5 percent by year end. It’s “perfectly possible, and it’s at that time that job creation will be fast enough to reduce unemployment,” he said May 20.
There was “further modest output growth in May, suggesting that economic expansion is being maintained through the second quarter,” said Jack Kennedy, a senior economist at Markit. “The service sector remained the driver of growth, offsetting another contraction in manufacturing.”
Markit’s manufacturing index rose to 49.3 in May from 48 in April, beating the median forecast of 48.5. The services gauge increased to 51.6 from 51.4.
In Germany, the largest economy in the 19-nation euro region, a composite index of services and manufacturing probably slipped to 53.8 this month from 54.1, according to a survey. The measure for the euro area held at 53.9, economists said in a separate poll. Markit will publish the region-wide number at 9 a.m. London time.