French economy returns to growth

The 3 trillion-dollar French economy has grown for the first time since February this month because coronavirus constraints eased and domestic consumption has increased, according to a closely monitored study.
The first reading of the country’s Purchasing Managers Index, which monitored activities in the manufacturing and service sectors, jumped to 51.3 in June. 32.1 in May. Values ​​above 50 indicate an expansion.

“France manages the package somehow, especially for the manufacturing industry,” said Chris Williamson, chief business economist for IHS Markit, who published a survey of executives in private companies. According to CNN Business, the country benefits from having more domestic-oriented companies.

“What we see in all economies is that any recovery in growth is supported by domestic demand,” said Williamson, pointing to all recovery in China. Said. “If you have an export-oriented manufacturing industry, as in Germany, it acts as a dampener.”

French President Emmanuel Macron said in March that no French company, regardless of size, would be allowed to collapse due to the epidemic. French finance minister Bruno Le Maire will spend nearly $ 521 billion to help the government’s economy recover I said This month in an interview with the French radio RTL.
Europe’s largest economies In June, it further alleviated coronavirus restrictions, causing many companies to reopen and increase demand for goods and services. The first compound PMI for countries using euros rose to a record low of 13.6 in April and rose to 47.5 in June from a reading of 31.9 in May.

“Broad economic activity across Europe looks better than we expected for this phase of recovery in late March,” economists in Berenberg told customers. Said.

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While production continued to decline in production and services, contraction rates slowed down considerably. Job losses were also moderate, but the number of staff in factories continued to decline.

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“Output and demand are still falling, but no longer collapse,” said Williamson. “The rise in PMI raises expectations that removing lockout restrictions will help end the fall as it enters summer.”

Williamson said, however, that the 50-level PMI readings only stabilized in the economy. “This job is not returning to normal. The levels were crushed according to the values ​​before the pandemic hit,” he said.

In the second quarter of the EU GDP, deepest contraction in the recording in the first three months of the year.

However, the “sharp recovery” in the PMI data shows that GDP will not be “catastrophically bad” as feared. “Today’s data provides some reassurance that the economy’s feet are back. But if some restrictions still remain and are afraid of a second wave fluctuation, it will take some time for the activity to return to pre-virus levels.” research note.

People have lunch at a restaurant near Arc de Triomphe in Paris, France on June 18.

According to IHS Markit, some businesses are still reporting weak demand as customers take a cautious approach to spending.

The companies said that after processing orders placed on hold during the crashes, there may be insufficient new orders to keep operations going.

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He added that the challenge for governments would be to ensure that demands are revitalized enough to help companies go through the crisis and hire staff.

France plans to extend its business support program up to two years. Speaking to Franceinfo radio earlier this month, labor minister Muriel Pénicaud said the government has taken measures that allow the public to reduce the working hours that are partially paid by the government.

The government is already promised about $ 17 billion to protect the country’s workforce in the aviation industry, airbus (EADSF) and Air france (AFLYY)and space components suppliers saffron (SAFRF) and Thalès.

IHS Markit Williamson expects the European economy to take three years to recover.

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– Sophie Stuber, Charles Riley, Ya Chun Wang and Benjamin Berteau contributed to reporting.

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