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France PMI Declines for 5th Time
World Economy

France PMI Declines for 5th Time

Business activity in the French service sector fell in January, reversing marginal growth one month previously. The final seasonally adjusted headline Markit France Services Business Activity Index registered 49.4 in January, down from 50.6 in December, the fourth contraction in activity in the past five months.
Markit reported that new business growth eased, but backlogs of work rose at a slightly faster rate while the pace of job shedding moderated. Output prices decreased at the steepest rate since October 2009, while input costs remained broadly stable. Business expectations meanwhile improved, strengthening to a ten-month high, France24 reported.
Jack Kennedy, Senior Economist at Markit, said: “France’s dominant service sector faltered at the start of 2015, with activity falling slightly to reverse December’s marginal growth. This reflected a subdued demand environment and generally weak economic conditions, which weighed on new business intakes. A dissipation of cost pressures in the wake of plunging oil prices allowed service providers greater scope to cut charges, which fell at the sharpest rate in over five years. On a brighter note, service providers’ business expectations improved to the highest since March 2014, although remained subdued relative to the survey’s long-run average.”

 Joblessness
Official statistics have shown that France’s unemployment level hit a new record high in December 2014.
According to official unemployment statistics published on Tuesday, joblessness rose by 0.2 percent, or 8,100 people, with almost 3.5 million people receiving benefits in December.
The latest figures were announced at the end of a difficult economic year for France, with 189,100 more people out of work in 2014 than in the previous year.
The European country’s economy is becoming stagnant with only a 0.3-percent gain in last year’s third quarter.
Economists believe that France requires a growth rate of about 1.5 percent to generate employment.
French President Francois Hollande has vowed not to seek re-election in 2017 if he is not able to lower the country’s growing unemployment rate.
Hollande has introduced two packages of reforms aimed at tackling the country’s joblessness.
The first, referred to as the Responsibility Pact, is a series of tax cuts for businesses in lieu of creating employment. 
The second is a set of reforms, which attempt to reopen the country’s closed economy, including increasing the number of Sundays in the year that shops can do business.
Both reforms are highly controversial with the former causing thousands of protests across the country.

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