France’s Revival Sees Economy Unexpectedly Return to Growth

The French economy’s revival from the coronavirus lockdown appears stronger than anticipated, with a measure of private-sector activity showing growth for the first time in four months.

IHS Markit’s Purchasing Managers Index jumped to 51.3 in June from 32.1 in May, beating economists’ expectations for 46.8. The individual gauges for both manufacturing and services also climbed above the 50 key level.

The euro rose after the report and traded at $1.1292 at 9:20 a.m. Paris time. European stocks opened higher, with the CAC 40 Index up 1.2%.

Given the nature of the lockdowns and their impact on economies, surveys are only giving a partial picture of what’s happening to businesses and households. Still, the reading echoes a recent analysis by Insee, France’s statistics office, that the economy is getting back toward normal levels of activity faster.

A rebound in activity in the near term was expected as economies reopen, but there’s still huge uncertainty about the longer-term implications of the virus. Social distancing, consumer worries and other disruptions mean full recovery will take time. An expected increase in unemployment could keep household spending in check, even as measures of confidence improve.

Bank of France Governor Francois Villeroy de Galhau has said the recovery could look like a bird’s wing, where there’s a sharp initial pickup, and then a more gentle trend after that.

“If I had to give a shape to the recovery I’d say it’s a half-V because we have climbed up very fast and we forecast we will continue to climb more gently,” he said on RTL radio last week. “Fundamentally, it’s a recovery in the form of a bird’s wing.”

The PMI also showed that demand remained subdued in June, with new orders continuing to decline. New export business fell, and job losses continued, led by services.




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