French manufacturing and services shrank more than analysts forecast in October as the euro area’s second-largest economy continued to struggle after stagnating in the first half of the year, reports Bloomberg.
A composite index for both industries fell to 48, the lowest in eight months, from 48.4 in September, London-based Markit Economics said today. A reading below 50 indicates contraction. The report also showed that companies cut prices the most in five years in a bid to drum up business.
The report comes as French President François Hollande faces growing impatience in other European capitals amid the country’s failure to comply with deficit rules it helped write. France, which has repeatedly violated fiscal rules, abandoned its deficit target for 2014 as the economy failed to grow in the first two quarters.
“The French economy remained stuck in reverse gear in October, as crumbling demand dragged activity lower,” said Jack Kennedy, a senior economist at Markit. “Companies scrabbled to attract new business” with price cuts, “underlining the extent of the pressures facing businesses at present,” he said.
Read more of this report from Bloomberg.