French Composite PMI surprises to upside – not so encouraging at detailed level

Investors have focused onto initial PMI report as slowdown in global growth has been haunting the markets since last week as US Federal Reserve stayed away from a rate hike over global concerns.

Today's PMI report was a bit surprising, especially as French economy showed an unexpected turnaround while Europe disappointed.

French Surprise

• Composite output index improved to 51.4, two month high, compared to 50.2 in August.
• Services PMI rose to 2 month high at 51.2
• Manufacturing expanded in September with PMI reading at 50.4, 3 month high, compared to 48.3 in August.
• Manufacturing output index rose to 51.9 in September compared to 48.4 in August. It is now at 18 month high.

However when the report looked in details, the feel is not that dashing, as a fact many sub-sectors show disappointments.

• Though growth was broad based and sharper in both manufacturing and services, growth in new work concentrated more towards services sector. In fact manufacturers reported marginal reduction in new orders. New export orders remained at same level.
• Employment in French private sector not only dropped in private, it was shedded at fastest pace in 10 months.
• Confidence over future business expectations remained positive but dropped to lowest in 11 months.

Despite sharp improvement in headline numbers, considerable doubt remains over whether this marks as turnaround for the economy. Focus will be on the final and net month's report.

France's CAC40 is currently trading at 4470, up 0.9% for the day.