Manufacturing activity in France contracted at the fastest pace in more than a year in August, underlining concerns over the economic outlook of the euro zone’s second-largest economy, preliminary data showed on Thursday.

In a report, market research group Markit said that its preliminary French manufacturing purchasing managers’ index fell to a seasonally adjusted 46.5 this month from a final reading of 47.8 in July. Analysts had expected the index to hold steady at 47.8 in August.

Meanwhile, the preliminary services purchasing managers’ index improved to a five-month high of 51.1 this month from 50.4 in July and better than expectations for a reading of 50.0.

The seasonally adjusted Markit Flash France Composite Output Index, which measures the combined output of both the manufacturing and service sectors rose from 49.4 in July to a four-month high of 50.0 in August.

A reading above 50.0 on the index indicates industry expansion, below indicates contraction.

Commenting on the report, Jack Kennedy, Senior Economist at Markit said, “Overall, the data point to quarterly GDP tracking around stagnation in the third quarter, continuing the flat trend seen since the turn of the year."

Following the release of the data, the euro trimmed gains against the U.S. dollar, with EUR/USD easing up 0.01% to trade at 1.3259, compared to 1.3263 ahead of the data.

Meanwhile, European stock markets were modestly higher after the open. France’s CAC 40 inched up 0.1%, Germany's DAX rose 0.1%, the DJ Euro Stoxx 50 tacked on 0.1%, while London’s FTSE 100 added 0.1%.

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