Italy service sector growth strengthens in September, PMI shows

ROME, Oct 3 (Reuters) – Italy's service sector expanded for a tenth month running in September and at the fastest pace since May, a survey showed on Friday, raising some possibility of firmer growth in the euro zone's third-largest economy. The HCOB Purchasing Managers' Index (PMI) for services climbed to 52.5 last month from 51.5 in August, comfortably above the 50.0 threshold that separates growth from contraction. A Reuters survey of 13 analysts had pointed to a stable reading of 51.5. Italian gross domestic product declined by 0.1% in the second quarter from the previous three months and the government is forecasting growth well below 1% this year. The PMI's subindex on new business inflows rose to 53.7 in September from August's 52.8, posting its highest level since April 2024. Indicators for employment and prices charged also climbed, albeit at a softer pace, respectively to 51.4 and 51.2. The subindex for future business expectations rose to 61.9 from a previous 58.5. "The services sector ended the third quarter on a strong note," said Hamburg Commercial Bank AG economist Nils Muller, while also noting however that export orders continued to decline amid muted European demand and geopolitical uncertainty. HCOB's sister survey for Italy's smaller manufacturing sector, published on Wednesday, moved in the opposite direction, indicating a return to contraction in September after a fleeting recovery the previous month. The composite PMI, combining manufacturing and services, was stable in September at 51.7. This stability, Muller said, "masks a growing imbalance between the sectors, raising questions about the sustainability of Italy's private sector recovery." (Reporting by Antonella Cinelli, editing by Gavin Jones and Toby Chopra)

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