Activity in France's private sector increased at a brisk pace in September, although the pace of growth eased slightly, bolstering hopes for a strong third quarter growth performance.
The flash Markit/CDAF composite purchasing manager's index (PMI), released on today, fell to a six-month low of 58.5 in September, down from a final figure of 59.5 the previous month.
But the reading was still comfortably above the 50 mark dividing expansion from contraction, reflecting healthy growth in output and activity in both the factory and service sectors.
September was the sixth straight month that the headline composite index has hovered close to the 60 mark, putting it at levels not seen since the middle of 2006.
"This is a very strong reading historically, one that's rarely been exceeded in the last 10 years," said Chris Williamson, chief economist at Markit.
"It would be surprising if we didn't see the third quarter repeating the 0.6 per cent GDP growth seen in the second quarter," he said.
France is due to release revised second quarter gross domestic product figures tomorrow, with preliminary third quarter data due out in November.
The flash PMI for France's factory sector rose to a four-month high of 55.4 in September from a final figure of 55.1 in August, reflecting faster growth in output and new orders.
The flash factory output index rose to 57.7 from 57.3 previously, reaching its highest level since April this year. The expansion in the service sector cooled in September, pushing the flash headline PMI down to 58.8 from 60.4.
But that followed four straight months of robust recovery, when activity levels grew at near historical rates.
"It's hard to continue to generate that growth, so we're not too worried, especially as the expectations index is recovering nicely," said Mr Williamson.
The services business expectations index climbed to 73.8 in September from a final reading of 68.2 in August, reflecting increasing confidence in the outlook for the year ahead.
The latest batch of PMI data appeared to echo the government's own more optimistic assessment of the economy which recently led it to raise its forecast for 2010 economic growth to 1.5 per cent from 1.4 per cent previously.
But economists have warned that the recovery may lose momentum in the months ahead, as widespread budget consolidation measures begin to bite into demand, both internally and from neighbouring European countries.
Markit's Williamson cautioned that factory export orders grew at their slowest pace since November 2009 in September, reflecting an easing in foreign trade which suggests the rate of growth may have peaked.
Reuters