The France of the Renaissance Sees the Economy Unexpectedly Return to Growth

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(Bloomberg) —

The French economy of the renaissance from the coronavirus lock appears stronger than expected, with a measure of private sector activity growth for the first time in four months.

IHS Markit’s Purchasing managers ‘Index jumped to 51.3 in June from 32.1 in May, beating economists’ expectations of 46.8. The individual gauges for both manufacturing and services also climbed above the 50 key level.

The euro rose after the report and traded at $1.1292 at 9: 20 am, Paris time. European equities have opened higher, with the CAC 40 Index up 1.2%.

Given the nature of the prohibitions and their impact on economies, the surveys are only giving a partial picture of what is happening to businesses and households. However, the play echoes a recent analysis conducted by the Insee, France’s statistics office, the economy is the return to normal activity levels more quickly.

A rebound in activity in the short term was expected that the savings will reopen, but there is still a large uncertainty on the long-term consequences of the virus. The social distance, consumption worries, and other disturbances, full recovery will take time. The expected increase in unemployment may keep household spending in check, even as confidence-building measures to improve it.

Bank of France, Governor of François Villeroy de Galhau said that the recovery could resemble a bird’s wing, where there is a strong initial collection, and then a milder trend after that.

“If I had to give a shape to the recovery, I would say that it is a half-V, as we climbed very quickly and we anticipate we will continue to ascend more gently,” he said on RTL radio last week. “Basically, it is a cover in the shape of a bird’s wing.”

The PMI also showed that demand remained moderate in June, with new orders continuing to decline. New export business has declined, and job losses have continued, led by the services.

(Updates with market reaction in the third paragraph.)

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