(Bloomberg) -- France’s economy showed signs of strengthening this month as services unexpectedly grew at the fastest pace in more than three years.
A Purchasing Managers Index for services rose to 53.4 from 49.4 in January, Markit Economics said on Monday. That exceeded economists’ estimate of 49.9 and is the highest since August 2011. Manufacturing weakened, with a gauge unexpectedly dropping to 47.7, where a reading below 50 indicates contraction.
French President Francois Hollande is pushing a reform bill through parliament that includes measures to help revive the economy, which barely expanded in the fourth quarter. The European Commission forecasts expansion of 1 percent this year, below the euro-area average.
The PMI data “provided better news on the
health of France’s private sector economy, suggesting that the first quarter could see an improvement,” said Jack Kennedy, an economist at Markit in London. “However, the performances of the services and manufacturing sectors diverged,” with factories seeing “flagging demand.”
The strength of services in February lifted France’s composite PMI to 52.2 from 49.3, the highest since 2011.
Nevertheless, Markit warned of a risk of deflation becoming entrenched in France. An index of prices charged fell to its lowest since October 2009, with the decline “broad-based across the services and manufacturing sectors.”
Markit will publish its PMI reports for Germany and the euro area later this morning. The euro-area composite gauge is forecast to increase to 53 from 52.6.