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Manufacturing and Service Sectors Help France to Rebound

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France composite index stands at 51.4 in September

A timely report on manufacturing contributes to investors’ ability to gauge the business sentiment surrounding economic activities. France’s composite output index increased to 51.4 in September compared to 50.2 in August 2015. It was another month of modest growth, with manufacturing contributing to the movement.

The manufacturing output index rose to 51.9 in September compared to 48.4 in August. Even the manufacturing PMI rose to a three-month high to 50.4 in September 2015.

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Increase in manufacturing fails to halt EWQ fall

Although the business outlook is improving, France-focused exchange-traded funds such as the iShares MSCI France ETF (EWQ) is not performing well. Over the past year, EWQ is down 9.89% as of September 23. Even the industrial stocks such as Alstom (ALSMY) and Eiffage (EFGSY) were down 10.29% and 7.94%, respectively, over the past year.

The energy stocks were the worst hit. CGG (CGG) and Total SA (TOT) were down 54.69% and 30.53%, respectively, for the same period due to falling crude prices.

Service sector rose to 51.2 in September

September data saw comprehensive growth across categories such as the manufacturing and service sectors. The flash France service activity index rose to a two-month high to 51.2 in September compared to 50.6 in August 2015. Growing optimism in the service sector has helped the stocks to perform well. Over the past year, software and computer services stocks Criteo (CRTO) and Cap Gemini (CGEMY) were up 16.02% and 25.86%, respectively, as of September 23. Communication equipment company Alcatel-Lucent (ALU) was up 12.78% over the past year as of September 23.

With the improved business sentiment in the manufacturing and service sectors, the French economy seems set to rebound and is much in line with the growth target of 1% this year.

Along with France, Germany’s PMI data is also out, which we’ll cover in the next article.

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