PARIS, July 22 Reuters French manufacturing activity contracted and growth in the services sector slowed in July, a preliminary purchasing managers39; survey showed on Friday, in a further indication the euro zone39;s second biggest economy could be heading towards recession.

Data compiler SP Global said its flash Purchasing Managers39; Index PMI for France showed the manufacturing subindex fell to 49.6 points, falling below the 50 point level that indicates growth in activity for the first time since November 2020. The subindex had been forecast to come in at 50.8.

The subindex for France39;s dominant services sector fell to 52.1 points, from 53.9 in June and below forecasts for a reading of 52.7. It was the third monthly decline in a row.

The data also showed the first drop in private sector new business activity since February 2021 as rising inflation running at 6.5 as of June weighed on customers39; purchasing power.

July 39;flash39; PMI data raises further concerns that the French economy is heading towards a recession, said SP senior economist Joe Hayes.

Its difficult to imagine the nearterm trend improving when anecdotal evidence from panellists continues to portray a picture of worsening health for demand, he said.

Reporting by Tassilo Hummel; Editing by Susan Fenton

Source Reuters