Growth in business activity in France's private sector slowed in April amid signs that the eurozone's second-biggest economy was on the verge of stalling, a key survey showed Thursday. The Purchasing Managers Output Index by London-based Markit Economics dropped to 50.2 points in April from 51.5 points the month before. The closely watched index remained just above the 50-point mark that divides expansion from contraction, and below the median estimate for an increase to 51.8 in a survey of economists conducted by Bloomberg.
Service sector growth almost stagnated and factory output moved further into decline alongside an increased loss of export orders and sluggish domestic demand, Markit said in a statement. "Output growth stuttered almost to a halt in April, signalling a continuation of the moribund economic environment in France," Markit economist Jack Kennedy added.
The French economy expanded at a sluggish rate of 0.4 percent in 2014 as the government battled stubbornly high unemployment. President Francois Hollande has launched a two-pronged attack to tackle joblessness and push for growth. The first is known as the Responsibility Pact, a series of tax cuts for businesses in return for job creation.
The second is a package of reforms aimed at opening up France's closed economy, including extending the number of Sundays per year when stores can open their doors. The government has forecast at 1.0 percent in 2015, rising slightly to 1.5 percent in 2016 and 2017.
Like other countries in the euro area, France is hoping the European Central Bank's stimulus programme will also help boost growth. But those hopes dimmed on Thursday as Markit's PMI for the entire eurozone showed business activity slowed in April to 53.5 points from 54 points in March. "The slowdown in April was... a symptom of weaker expansions in both Germany and France, with the latter suffering a near-stalling of growth led by an accelerating downturn of its manufacturing economy," said Markit chief economist Chris Williamson.
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