French economic outlook deteriorates as manufacturing sector contracts in July – Flash PMI

An employee works on the automotive assembly line of Bluecar electric city cars at Renault’s factory in Dieppe, western France, September 1, 2015. REUTERS/Philippe Wojazer

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PARIS, July 22 (Reuters) – French manufacturing activity contracted and service sector growth slowed in July, a preliminary survey of purchasing managers showed on Friday, a further sign that the world’s second-largest economy Eurozone could be heading into recession.

Data compiler S&P Global said its flash Purchasing Managers’ Index (PMI) for France showed the manufacturing sub-index fell to 49.6 points, falling below the 50-point level that indicates growth of activity for the first time since November 2020. The sub-index had been forecast to enter at 50.8.

France’s dominant services sector sub-index fell to 52.1 points from 53.9 in June and below forecasts for a reading of 52.7. This is the third consecutive monthly decline.

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The data also showed the first decline in new business activity in the private sector since February 2021, with rising inflation – to 6.5% in June – weighing on customers’ purchasing power.

“July’s ‘flash’ PMI data raises new concerns that the French economy is heading into a recession,” said Joe Hayes, senior economist at S&P.

“It’s hard to imagine the short-term trend improving when the anecdotal evidence from panelists continues to paint a picture of deteriorating health for demand,” he said.

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Reporting by Tassilo Hummel; Editing by Susan Fenton

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