Strikes Take a Toll on French Economy at Start of 2020

(Bloomberg) --

The French economy stuttered at the start of 2020 thanks to the fallout from strikes and protests over President Emmanuel Macron’s planned pension reforms.

A measure of services activity slipped more than economists expected, hitting a four-month low of 51.7. A gauge of new business declined to the weakest level in eight months.

Strikes Take a Toll on French Economy at Start of 2020

The strikes, which began in December, disrupted transport and hit holiday shopping. Retail chain Casino last week slashed its forecast for profit in France because of the hit to consumer spending.

While the walkouts weighed on services and the domestic economy, January was a better months for manufacturers. According to IHS Markit’s Purchasing Managers’ Index, they saw demand rise and a measure of activity edged up.

The euro was little changed after the report, trading at $1.1053 as of 09:16 a.m. Paris time.

Overall optimism improved to the strongest in nine months, with some firms counting on an end to the protest action. Transport services have largely returned to normal, and numbers at demonstrations have declined recently.

Markit will publish its PMIs for Germany and the euro area later this morning. Both are forecast to show a slight improvement in January.

©2020 Bloomberg L.P.

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