Nov 24, 2015

REPORTS: Paris Attacks Slow France Economic Growth
Signs that the attacks in Paris have impacted France’s service sector have emerged in the latest survey by Markit.

The firm said a rapid fall-off in trade was behind its index falling from 52.7 in October to 51.3 in November.

“We think the key reason for the slowing in services growth is due to the attacks,” Chris Williamson, Markit’s chief economist said.

Markit said 60% of survey responses from services sector firms were received after the 13 November attacks.

The services index remains above 50, meaning that it is continuing to grow, but at a slower pace.
“Clearly there’s been a cut in footfall and any sort of feel-good factor amongst consumers in the wake of the horrific events.

“But history does tell us that these events tend to have a very short-lived impact,” added Mr Williamson.

The “flash” manufacturing PMI rose to a 19-month high, and Mr Williamson said the rest of the survey data suggested “a more encouraging picture of France continuing to lift itself out of its gloom”.

Confidence hit

The survey comes after the boss of the industrial conglomerate Siemens warned that the Paris terrorist attacks and political instability in Europe were making companies more reluctant to invest.

“The biggest economic damage from these attacks is on confidence and confidence is a crucial element in this phase. It is indispensable to help countries exit the crisis,” Joe Kaeser told the Financial Times.

Yet overall, European businesses reported the fastest rates of growth in business activity and employment for four and a half years in November, according to Markit.

Its “flash” purchasing managers index for the eurozone rose to 54.4 from 53.9 in November – the survey’s fastest rate of expansion since May 2011.

Germany, which saw growth in manufacturing and services accelerate to a three-month high, helped drive the overall index higher.

Mr Williamson said the data put the 19-nation euro area on track for growth of 0.4 to 0.5% in the final quarter of the year.

But European Central Bank (ECB) president Mario Draghi recently indicated he was disappointed with the current rate of growth and suggested policymakers could take fresh action to boost the economy.

Draghi’s ECB has an inflation target of 2%, but prices in the eurozone have stayed low, with CPI at 0.1% in October.

“If we decide that the current trajectory of our policy is not sufficient to achieve that objective, we will do what we must to raise inflation as quickly as possible. That is what our price stability mandate requires of us,” the European Central Bank chief said last week.
Source: BBC

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