French service companies have ignored the impact of the latest coronavirus containment measures and have reported unexpected growth in business over the past month, according to a widely followed business survey.
The IHS Markit French Flash Service Purchasing Managers Index defied downside expectations by increasing to 50.4, rising above the 50 mark which indicates that a majority of companies are showing growth in the activity for the first time in eight months.
The results of the French survey contrasted with a slightly worse-than-expected reading of the equivalent survey of German companies, which fell to 50.1. But overall, the results indicate that the eurozone economy made a relatively strong start in the second quarter.
The service sector accounts for nearly three-quarters of economic activity in the euro area, and businesses heavily reliant on face-to-face contact with customers have borne the brunt of the measures to contain the pandemic.
“The latest PMI data highlighted the first increase in private sector activity since the initial rebound in Covid-19 ended last summer,” said Eliot Kerr, economist at IHS Markit.
The eurozone economy continues to suffer from restrictions deployed to curb the bloc’s high rates of Covid-19 infection. But the pace of vaccinations has recently picked up in many countries, fueling hopes of economists that restrictions could be relaxed next month.
The rise of German and French service companies has been accompanied by continued strong growth reported by manufacturers from both countries, less disturbed by restrictions on coronaviruses and benefiting from the increase in world trade.
Germany’s export-focused PMI manufacturing sector beat expectations despite falling to 66.4, down slightly from a record high in March. Germany’s composite PMI, which combines services and industrials, fell from 57.3 to 56.
It was a similar story for the French manufacturing PMI index, which slipped to a two-month low at 59.2. France’s composite PMI hit a nine-month high at 51.7.
Flash PMIs, based on an April 12-22 survey and released about 10 days before the final figures, are the most comprehensive early indicator of the economic impact of the latest coronavirus restrictions on the economy.