Italian service sector returns to growth in January-PMI

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ROME, Feb 3 (Reuters) – Italy’s services sector saw a modest rise in activity in January following four months of contraction, a survey showed on Friday, helping allay worries that the economy might be sliding into a recession.

S&P Global’s Purchasing Managers’ Index (PMI) for Italian services climbed to 51.2 in January from 49.9 in December, pushing back above the 50 mark that separates growth from contraction.

The result was roughly in line with a median forecast of 51.0 in a Reuters survey of 11 analysts.

The new business sub-index for the sector came in at 53.0 against 50.5 the month before — its best score since last May.

“The modest rise in output, and more significantly the solid increase of new business volumes, should go some way to assuaging fears of recession,” said Paul Smith, economics director at S&P Global Market Intelligence.

“That said, the underlying growth profile of the sector remains fairly weak, and worries over the strength of the recovery persist. Moreover, the spectre of inflation is still with us,” he added.

The PMI for Italy’s smaller manufacturing sector, released on Wednesday, showed moderate growth in January after six straight months of contraction.

The composite Purchasing Managers’ Index combining services and manufacturing stood at 51.2 in January from 49.6 in December — its first venture into positive territory since June.

National statistics bureau ISTAT said this week that Italy’s economy shrank by 0.1% in the fourth quarter of last year from the previous three months, raising fears of recession, which is defined as two consecutive quarters of falling GDP.

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