FRENCH MARKIT FLASH PMI: SERVICES SECTOR TUMBLING DOWN IN FEBRUARY

According to Markit flash PMI, French activity decreased sharply (45.2) in February, sinking into the contraction area for the third month in a row (from 49.5 in December) at a faster sp eed than expected. This i s due to the tumbling down of the services index (from 47.3 in January to 43.6 in February) resulting from containment measures. On the opposite, the manufacturing output displayed a modest expansion (from 49.5 to 52.4), returning back into the expansion area. The divergence in the PMI index between the manufacturing and services sector, outlined since December is reinforced and confirmed that the containment measures have hit services activities involving close social interaction harder than industrial sector. This divergence is also true at the euro area level. Nevertheless, the fall of the Eurozone services index in February to 44.7 (from 45.4 in January) was cushioned by further expansions of the manufacturing index (from 54.8 to 57.7), so that the PMI composite index slightly improved from 47.8 to 48.1. Moreover, the euro area PMI composite remained in the contraction area. These figures confirm that the weak economic activity already displayed in Q4 is extending and will impact the beginning of the year.