PARIS, July 24 (Reuters) – France’s private sector contraction eased in July, with services output slowing only marginally, although inflation, borrowing costs and geopolitics all remained concerns as tensions in the Middle East flare up again, a business survey showed on Friday.
The S&P Global flash France composite output index rose to 49.6 from 47.2 in June, a preliminary survey showed. The 50 mark separates growth from contraction.
A Reuters poll forecast for the July flash Composite PMI stood at 47.8.
The S&P Global flash France manufacturing Purchasing Managers’ Index declined to 50.0 in July from 51.2 in June. The Reuters poll forecast was 51.
The S&P Global flash France services PMI business activity Index rose to 49.8 from 46.8 in June and above a Reuters forecast for 47.5.
The INSEE statistics agency said on Thursday that French business confidence has risen to a four-month high in July despite the latest flare-up in the U.S.-Israeli war on Iran.
Nevertheless, Joe Hayes, senior principal economist at S&P Global Market Intelligence, said ongoing economic uncertainty caused by Iran conflict would remain a headwind.
“While the latest survey data brought with it good news in the form of the France PMI rising further from its May low and inflationary pressures easing, it feels overly optimistic to bank on this momentum continuing given renewed pressures on oil and gas markets in recent days,” said Hayes.
“Escalating tensions between the U.S. and Iran bring fresh uncertainty about inflation, borrowing costs and geopolitics more broadly, and uncertainty has so often been to the detriment of the French economy in recent years,” he added.
(Reporting by Dominique Vidalon; Editing by Hugh Lawson)
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