French manufacturing slips back into contraction in July, PMI shows

PARIS, Aug 3 (Reuters) - France's ‌manufacturing sector contracted ​in ​July as declines in output and new orders accelerated, a business survey showed on Monday.

• The S&P Global France Manufacturing ‌Purchasing Managers' Index (PMI) fell to 49.8 in July from 51.2 in ⁠June, a survey by S&P Global showed. The 50-mark separates growth from contraction.

• "France's manufacturing ‌sector is struggling once again ‌as inflationary pressures and weak confidence undermine order books," said Joe Hayes, Senior Principal Economist at S&P Global Market Intelligence.

• "Oil and gas price ​increases in recent weeks will signal to businesses that the broader macroeconomic and geopolitical environments are both volatile and uncertain. This will likely ⁠erode confidence further, raising the risk of further demand destruction, especially if inflation kicks higher," he ​added.

• New orders fell for a third straight month, and the downturn gathered pace. Export demand weakened more sharply, with ​new export business posting its steepest decline ‌in a year as firms cited price pressures, weak client confidence and the war in the Middle East.

• Manufacturers ⁠cut output again at the start of the third quarter, extending the current decline to three months. Firms also reduced purchasing activity at the fastest pace ⁠since March, while stocks of raw materials and intermediate goods fell moderately again.

• Employment was ​a bright spot, with factory payrolls rising for a second consecutive month and at the quickest pace since December last year. Backlogs were cleared for only the second ‌time this year, while stocks of finished goods fell for a third month.

• Cost pressures eased, with input ‌price inflation slowing to a four-month low, although output charges rose again at ⁠only a slightly weaker pace ‌than in June. Firms ​were more upbeat about the outlook, with future output expectations improving for a second month.

(Reporting by Makini Brice; Editing by ‌Toby Chopra)

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