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French Business Activity Weaker Than Expected in August: PMI

PARIS (Reuters) - French business activity has lost more momentum than expected in August, a survey showed on Friday, as firms worked off backlogs of work built-up during a coronavirus lockdown.

Data compiler IHS Markit said its preliminary purchasing managers index (PMI) fell to 51.7 points from 57.3 in July - far below the average forecast for 57.2 in a Reuters poll of economists.

The reading for the services sector stayed above the 50-point level dividing an expansion from a contraction, but the preliminary PMI reading for manufacturing came in below that level.

The dominant service sector saw its PMI reading for August fall to 51.9 points from 57.3 in July - below a forecast for a reading of 56.3 points.

The manufacturing PMI fell to 49.0 points in August - down from 52.4 in July and below a forecast for 53.7 points.

French business activity had surged after the euro zone’s second-biggest economy emerged in May from one of the strictest lockdowns in Europe as firms responded to pent-up client demand.

The August PMI survey indicated that backlogs were no longer growing in the service sector and were growing at a slower pace in manufacturing. Meanwhile, new order flow was stable in services and slowed slightly in manufacturing, the survey showed.

The INSEE statistics agency said at the end of July that the French economy contracted by a post-war record of 13.8% in the second quarter due to the lockdown.

Reporting by Sudip Kar-Gupta; Editing by Leigh Thomas and Hugh Lawson

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