French Economic Growth Slowed After Paris Attacks, Surveys Show -- Update
November 23 2015 - 5:13AM
Dow Jones News
By Paul Hannon
France's economy slowed following the Nov. 13 terror attacks in
Paris and a subsequent tightening of security around the country,
but it continued to grow, according to surveys released Monday.
However, that slowdown in the eurozone's second-largest member
wasn't sharp enough to retard the currency area as a whole, which
recorded its strongest expansion in more than four years.
That suggests the eurozone economy has gathered fresh momentum
after its third-quarter slowdown, although much will depend on how
long the sense of heightened insecurity that has followed the Paris
attacks persists, and how weakened business and consumer confidence
will be as a consequence. Tighter controls on movement across
Europe's borders could slow trade, while tourists may stay away
from some of the world's most visited cities.
And despite the pickup in activity, the surveys showed that
businesses continued to cut their prices, making it more difficult
for the European Central Bank to boost the annual rate of inflation
to its target of just under 2% from 0.1% in October.
Data firm Markit said the headline measure of activity, based on
surveys of 5,000 companies around the eurozone, and known as the
composite purchasing managers index, rose to 54.4 in November from
53.9 in October, its highest level since May 2011. A reading above
50 indicates that activity increased, while a reading below that
level shows that activity decreased.
The survey suggests that growth may accelerate further in coming
months, since new orders where also at their highest since
mid-2011, along with new hiring.
But despite the resilience shown by eurozone economies in the
face of the terror attacks and a weakening of demand for the
currency area's exports from China and some other large developing
economies, economists continue to expect the ECB to provide more
stimulus when its governing council meets Dec. 3.
"With recent comments from ECB chief Mario Draghi highlighting
how the central bank remains disappointed with the strength of the
upturn at this stage of the recovery, November's slightly improved
PMI reading will no doubt do little to dissuade policy makers that
more needs to be done at their December meeting to ensure stronger
and more sustainable growth," said Chris Williamson, Markit's chief
economist.
The surveys are the first measure of French economic activity
released since the attacks on Paris, and 57% of responses from
purchasing managers at manufacturers and service providers came in
the days after the assaults at the Bataclan concert hall and other
locations claimed 130 lives in the French capital. Markit said
responses were received between Nov. 12 and Nov. 20.
"Some hotels & restaurants specifically mentioned the Paris
attacks as a factor leading to lower activity but none outside that
sector," said Jack Kennedy, an economist at Markit.
France's composite PMI fell to 51.3 from 52.6 in October.
Other details recorded by the French surveys point to continued
growth in the months ahead, with new orders picking up. However,
businesses cut some jobs, a sign they aren't confident that demand
will continue to rise.
The French economy returned to growth in the three months to
September, having stagnated in the three months to June. But it has
struggled to recover from the 2008 financial crisis and the
eurozone debt crisis that followed, with the unemployment rate
still in double-digits.
Mr. Kennedy said the PMIs for October and November indicate the
French economy is on course to grow at the same 0.3% rate in the
final quarter as in the three months to September.
Write to Paul Hannon at paul.hannon@wsj.com
(END) Dow Jones Newswires
November 23, 2015 04:58 ET (09:58 GMT)
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