Macron, who won the presidential election on May 7, came to power promising to renew French politics and bring in fresh faces.
A large group of onlookers, some carrying European flags, stood outside the chancellery as Macron arrived. Macron and Merkel were all smiles inside, and the German leader declared that "Europe will only do well if there is a strong France, and I am committed to that".
For far-right leader Marine Le Pen, Macron's rival for the presidency, the selection of Philippe reflects a continuation of the system she hoped to break. He is Merkel's fourth French president in almost 12 years as German leader.
"Many countries including France would need to organise a referendum".
"He has a very good relationship with Merkel", the source said.
But European Commission Chief Jean-Claude Juncker had pointed out that "a major change with a eurozone finance minister and a budget would require a change in the EU's main treaty", said Friederike von Tiesenhausen, German Finance Ministry spokeswoman.
The 28-nation European Union faces complex divorce proceedings with Britain, its current No. 2 economy.
Merkel and Macron want to kick-start ties with an alliance some German media have dubbed "Merkron", stressing that the European Union is resilient despite Britain's vote to leave and a spate of financial and migration crises that have boosted the far-right across the bloc.
"The French agenda will be an agenda of reform in the coming months, in economic, social and educational terms", he said.
He said he will implement a reform agenda at home "not because Europe requests it, but because France needs it".
Macron was also criticised for not appointing a woman.
The mayor of his hometown since 2010, the gritty northern port of Le Havre, Philippe was first elected to parliament in 2012 as a Republicans MP for his Seine-Maritime area.
Mr Philippe is not a member of the president's new party - La République En Marche - but of the centre-right Republicans.
According to Devecchio, Philippe's appointment would allow the right to rethink and readjust their policies in the long term, however, this decision might cost Macron some of his left-wing supporters.
Philippe is a close associate of former prime minister Alain Juppe, who leads the moderate wing of The Republicans and has indicated that he favours helping Macron.
This month, Macron will also hold talks with Donald Trump, when the U.S. president visits Brussels for a North Atlantic Treaty Organisation summit.
But, anxious to preserve a balance between the center-left and center-right in his nascent political movement, Macron has been less than welcoming towards late arrivals from the Socialist Party.