PARIS, Feb 2 - French manufacturing activity surged in January as the country became the fastest-growing of the major euro zone economies, but it is likely to continue to shed jobs until spring, a survey published on Monday showed. Growth in output and new orders also charged ahead to 40-month highs, providing welcome news for the conservative government, which is banking on more robust growth to return its public deficit to within EU limits and create jobs. The /CDAF Purchasing Managers' Index (PMI) registered 53.50 in January, an 18-month high and the fourth consecutive month the index has topped 50.0, which is the watershed between contraction and expansion. "France is enjoying the fastest growth of the big euro zone economies at the moment," said Chris Williamson, head of economics at NTC Research, the group that compiles the survey for . "Output and new orders are at 40-month highs, the fastest since September 2000. The PMI is only marginally below the level that it was in 2002, and it only needs to go a tiny bit higher and then it would be at these 40-month highs. "What is holding it back that slight extent, relative to output, is the employment situation," he added. Jobs remained one of the few black spots in an otherwise buoyant outlook for the second largest economy in the 12-nation euro currency zone.
The manufacturing sector shed jobs for the 18th consecutive month in January, although at a slower rate than in December, with around 15 percent of firms surveyed signalling cuts. French ministers have urged the European Central Bank to intervene to tame the resurgent euro, worried the currency's strength will hurt companies which export outside the euro zone, and stall Europe's nascent economic recovery. Although it has come off highs of around $1.2900 two weeks ago, the strength of the euro continues to cause French ministers headaches over jobs.
But the PMI survey indicated France was to an extent bucking the currency handicap, with the United States a frequent source of new business in January despite the euro's strength. Williamson indicated, however, that with raw material costs up and prices forced down by tough competition from imports, firms continued to boost productivity through job losses. "We don't expect any significant growth in employment in the foreseeable future...the first half of this year. We hope that by the spring it may have stabilised," he said.//