France Private Sector Moves Closer To Stabilization

(RTTNews) - France's private sector output moved closer to stabilization in July as the Olympic Games fueled economic activity, flash survey data compiled by S&P Global showed on Wednesday.

The HCOB composite output index posted 49.5 in July, up from 48.2 in June. The score was expected to climb moderately to 48.9.

A score above the threshold 50.0 indicates expansion, while a below 50 reading suggests contraction.

"The French economy seems on track for a recovery in the second half of the year, a recovery led by the service sector, but both input and output prices remain a challenge for the French economy as inflation rates accelerated," Hamburg Commercial Bank economist Norman Liebke, said.

The French economy is projected to grow 0.3 percent in the third quarter, said Liebke.

The flash manufacturing Purchasing Managers' Index dropped to 44.4 from 45.3 in June. The score was forecast to rise to 45.8.

On the other hand, the services PMI rose to a three-month high of 50.7 from 48.8 in the previous month. The expected reading was 49.7.

A sharper contraction in factory production was offset by a renewed expansion in activity at services firms. The manufacturing sector contracted for a twenty-sixth straight month and also marked the biggest fall since January.

By contrast, business activity at services companies increased for the first time since April, underpinned by Olympic Games. The end of the election period also boosted output.

The volume of new business logged a decline in July. The decline was primarily factory-led as manufacturers posted a steeper fall and demand for services dropped only marginally.

Backlogs of work depleted again in July, particularly in the goods-producing sector. Nevertheless, employment increased for the sixth straight month. But hiring was restricted to the service sector.

The survey signaled a further weakening of business confidence. Although firms remained optimistic of higher activity, the degree of positivity fell for a fourth straight month to a year-to-date low.

Finally, survey showed a marked intensification of cost pressures. Operating expenses was the fastest since last November. In turn, selling charges grew at the fastest pace in three months.