France private sector returns to growth at fastest rate in 25 months, PMI shows

PARIS, Sept 23 (Reuters) - France's private sector grew in September at its fastest pace in just over two years, driven by a rebound in services demand, a business survey showed on Wednesday.

The S&P Global Flash France Composite Output Index, a preliminary estimate, rose to 51.2 from 48.5 in August, a survey by S&P Global showed.

The 50-mark separates growth from contraction.

"The French economy displayed surprising resilience in September, although the durability of this expansion is questionable given new orders barely rose and firms' own expectations for activity deteriorated," said Joe Hayes, Senior Principal Economist at S&P Global Market Intelligence.

Services provided most of the momentum. The Flash France Services PMI Business Activity Index rose to 51.4 from 48.0, a 10-month high, while manufacturing output growth slowed and remained only marginal.

Demand improved only mildly. New orders rose for the first time in 10 months, while new foreign business posted its softest contraction of the year-to-date, helping drive the quickest increase in outstanding business volumes in almost three-and-a-half years.

Companies still cut staff for a fifth successive month, with respondents citing redundancies, resignations and non-renewal of temporary contracts. At the same time, input costs and output charges both rose at their fastest rates since May, fuelled by higher fuel, energy, metals and component prices.

Still, business expectations worsened again, leaving French companies the least optimistic about the year-ahead outlook since May as higher interest rates, political uncertainty and international competition weighed on confidence.

(Reporting by Makini Brice; Editing by Toby Chopra)