French Economy Likely Slowed in December; PMI Data Underwhelms
December 14 2018 - 4:13AM
Dow Jones News
By Paul Hannon
French economic growth likely ground to a halt in December as
businesses reported widespread disruption as a result of weeks of
anti-government protests, while a slew of eurozone, German and
French PMI data releases sounded downbeat signals.
The slowdown in the eurozone's second-largest economy comes as
Italy hovers on the brink of a recession, and Germany seeks to
rebound from a third-quarter drop in output. It also coincides with
a European Central Bank decision to end a bond-buying program that
has provided support to growth for years.
Data researcher IHS Markit on Friday said its provisional
measure of activity in the French private sector--based on a survey
of 750 businesses operating in the manufacturing and services
sectors--fell to 49.3 in December from 54.2 in November. This is
the first time since June 2016 that the reading has fallen below
50.0--the threshold that points to a drop in activity.
French Finance Minister Bruno Le Maire had earlier in the week
highlighted the negative impact of the so-called yellow vests
protests on the economy, estimating that they will trim 0.1
percentage points from the country's economic growth this year. The
Bank of France also cut its growth projection for the year's final
quarter by 0.2 points on Monday, citing the impact of protests on
retailers.
Activity in both the manufacturing and services sectors declined
in December, with the former recording its weakest month for almost
four years.
The weakness in France may prove temporary if the protests ease.
And for the eurozone economy as a whole, the greater worry may be
Germany, where the composite Purchasing Managers' Index fell to
52.2 from 52.3 in November, reaching its lowest level in four
years.
Economists had expected to see a rebound in German growth during
the final three months of the year as the automobile industry
recovered from a third-quarter slump that was caused by delays in
testing model types for compliance with new emissions standards.
Economists surveyed by The Wall Street Journal last week had
expected to see a rise in the PMI for the manufacturing sector
stabilize, but instead it fell to 51.5 from 51.8.
The eurozone economy experienced its weakest quarter of growth
since early 2013 during the three months through September, with
Germany and Italy contracting as France picked up.
But the surveys of purchasing managers suggest any end-of-year
rebound will likely be modest, leaving the economy entering 2019 on
an uncertain trajectory. The composite PMI for the eurozone as a
whole fell to 51.3 from 52.7 in November--its lowest reading for 49
months.
"Companies are worried about the global economic and political
climate, with trade wars and Brexit adding to increased political
tensions within the euro area," said Chris Williamson, IHS Markit's
chief business economist. "The surveys also point to further signs
that the struggling autos sector continued to act as a drag on the
region's economy."
Write to Paul Hannon at paul.hannon@wsj.com
(END) Dow Jones Newswires
December 14, 2018 04:58 ET (09:58 GMT)
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