Italian services sector growth slows, employment drops, PMI shows

ROME (Reuters) - Italy's services sector grew marginally in January but underlying demand conditions remained weak and employment levels decreased, a survey showed on Wednesday.

The HCOB Global Purchasing Managers' Index for services edged down to 50.4 in January from 50.7 in December, remaining just above the 50 mark that separates growth from contraction.

That came broadly in line with a median forecast of 50.5 in a Reuters survey of 14 analysts.

New business declined for a third consecutive month, coming in at 49.0 from a previous 49.1, while the employment index fell to 49.0 from 51.3 in December, returning to negative territory for the first time since October.

"Activity in the Italian service sector remains within the growth area, but only marginally," said HCOB economist Jonas Feldhusen. "Underlying demand remains weak and has worsened again."

A sister survey for the manufacturing sector published on Monday showed contraction for a 10th month running in January and at roughly the same pace as the month before.

Overall, Italy's private sector continued to contract slightly, with the composite PMI at 49.7, unchanged from December and below the 50 mark for a third month running.

(Reporting by Angelo Amante, editing by Gavin Jones and Christina Fincher)

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