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)