The services sector in France contracted by slightly more than forecast last month, according to the results of a new survey out on Thursday.

A decline in new orders weighed on businesses throughout the eurozone’s second-largest economy.

The HCOB France final purchasing managers index (PMI) for the services sector, compiled by S&P Global, edged down to 47.1 points in July from 48.0 points in June. The figure fell short of July’s flash services PMI which had provided a reading of 47.4 points, Reuters news agency reports.

A figure below the 50-mark indicates a contraction in activity, whilst a reading over 50 signals growth.

The final composite PMI figure for last month – which takes into account both the country’s services and manufacturing sectors – also declined to 46.6 points in July from 47.2 points in June. According to HCOB, this marked the largest fall in the composite PMI figure since November 2020.

This latest reading confirms a further dip in the French services sector in July, as well as a contraction in the economy. The lack of new businesses also indicates the country’s outlook will likely remain increasingly challenging in the third quarter, and discussions of a recession will begin to come back into focus, says HCOB.

“The French service sector is falling further behind as activity dropped for the second month in a row in July. At the same time, there is a lack of new business, especially from abroad, which does not bode well for the performance of service companies over the next few months,” according to Cyrus de la Rubia, chief economist at Hamburg Commercial Bank.