French business activity cools unexpectedly in July: PMI

FILE PHOTO: An employee works on the automobile assembly line of Bluecar electric city cars at Renault car maker factory in Dieppe, western France, September 1, 2015. REUTERS/Philippe Wojazer/File Photo

PARIS, (Reuters) - French business growth slowed unexpectedly in July as political tensions and trade disputes weighed on the euro zone’s second-biggest economy, a survey showed on Wednesday.

Data compiler IHS Markit said its composite Purchasing Managers Index (PMI) fell to a two-month low of 51.7 points from

52.7 in June, below a forecast of 52.5 points.

A reading above 50 indicates that activity is expanding, while anything below that level signifies a contraction.

The services PMI fell to 52.2 points from 52.9, while the manufacturing PMI declined to 50.0 from 51.9, with both those

measures also missing forecasts.

“Following a seven-month high in June, growth of the French private sector eased at the start of the third quarter. The slowdown was driven by softer new order growth, as sales at manufacturers slipped back into contraction territory at a time of ongoing geopolitical tensions,” said IHS Markit economist Eliot Kerr.

“...The rate of expansion in overall business activity remains historically subdued... Moreover, softer growth in July

dents hopes of a swift recovery to the long-run rate.”

Reporting by Sudip Kar-Gupta; Editing by Leigh Thomas and John Stonestreet;; +33 1 49 49 54 52