France's factory and services output index hits 4-year high, evidence of strengthening economy

An index of French factory and services output rose to its highest in almost four years in June, which is the sign that Europe's second largest economy is gaining momentum.

On Tuesday Markit Economics said its Purchasing Managers Index jumped to 53.4 from 52 in May - the strongest figure since August 2011.

It exceeded the median estimate of economists for an unchanged reading. An index of manufacturing climbed to 50.5 from 49.4, the first time it’s indicated growth since April 2014, while a measure for services rose to 54.1 from 52.8.

The International Monetary Fund predicted that growth in France would exceed 1% in 2015, more than twice than last year, with the main reasons for that being cheaper oil and weaker euro. Economists are now expecting to see whehter the uplift is strong enough to prompt businesses to invest and drive further expansion in 2016.

Driven by a stronger service-sector performance and a stabilization in manufacturing, the French economy picked up further in June, according to Jack Kennedy, an economist at Markit.

“With service-sector business expectations standing at the highest level for over three years, it seems firms are becoming increasingly optimistic of a convincing upturn in activity.”

The data “bode well” for second-quarter gross domestic product, following the 0.6 percent expansion in the first quarter, he said.

Markit will publish its measures for the 19-nation euro-area at 9 a.m. London time. The bloc’s composite index is expected to have slid to 53.5 from 53.6 in May, according to analysts.