French business activity contracted in June for the first time in five months, a survey published on Friday showed, as the economy's dominant services sector unexpectedly shrank.

HCOB's flash Purchasing Managers Index (PMI) for France's services sector, compiled by S&P Global, fell to 48.0 points - its lowest since the start of the year, from 52.5 in May. Any reading above 50 points shows growth while figures below 50 show a contraction.

The reading was also sharply below a Reuters poll forecast of 52.0 points. An index measuring business expectations, which feeds into the services PMI, declined by 6.2 points, to 53.6, its lowest level since October 2020.

The flash June PMI figure for France's manufacturing sector fell to 45.5 points from 45.7 in May. It beat a Reuters poll forecast for 45.4 points but nevertheless marked a contraction.

The flash June composite PMI figure - which comprises both the manufacturing and services sectors - fell to 47.3 points - a 28-month low - from 51.2 in May, and was also below a Reuters poll forecast of 51.0 points.

"The HCOB flash PMIs for June do not paint an encouraging picture for the French economy, as was the case in recent months. With a value of 47.3, the HCOB Composite PMI is the lowest it has been since the beginning of 2021. Moreover, the index fell considerably compared with the previous month, with a drop of around four points, " said Norman Liebke, economist at Hamburg Commercial Bank.

"The services sector is mainly responsible for this decline. The companies surveyed indicated a renewed drop in activity, citing inflation and challenging financial conditions as reasons that led to lower business activity," Liebke added.

French Finance Minister Bruno Le Maire said on Tuesday he was sticking for now with the government's forecast of 1% economic growth for 2023, adding there may be a revision in September. (Reporting by Benoit Van Overstraeten; Editing by Susan Fenton)