BERLIN, Sept 23 (Reuters) - Germany's private sector grew for the 17th month running in September, a survey showed on Tuesday, suggesting Europe's largest economy has expanded in the third quarter after a surprise contraction in the second.
Markit's flash composite Purchasing Managers' Index (PMI), which tracks the manufacturing and service sectors that make up more than two-thirds of the economy, rose to 54.0 from 53.7 in August, moving further above the 50 mark denoting growth.
"The German economy is still ticking along at a reasonable rate of growth but it's by no means impressive. There are signs that it could weaken further," said Chris Williamson, chief economist at Markit.
Confidence among service providers slumped to the lowest in almost two years, which Williamson said may well have been partly due to the Ukraine crisis.
Overall he said the PMI surveys suggested the German economy would grow by 0.4 percent in the third quarter. The economy steamed ahead early this year thanks to an unusually mild winter but it shrank by 0.2 percent in the second quarter and some economists said there was a risk it could fall into recession between July and September.
Still, business activity in the services sector increased slightly more sharply than in August as new business continued to flow in, leading firms to take on new staff. The PMI for the sector rose to 55.4 from 54.9.
The manufacturing sector grew at its slowest pace since June 2013, as output was at its weakest in over a year, with the PMI falling to 50.3 from 51.4 - its lowest reading since June 2013 and below all forecasts in a Reuters poll of 32 economists.
Faced with a fall in domestic orders and weakening foreign orders, manufacturers cut jobs for the fourth straight month. "It's not a picture of a prospering factory economy," said Williamson.
There were however some bright spots as input prices fell more sharply than output prices, and factories stepped up purchasing activity, suggesting they expect output to increase in the months ahead.
(Reporting by Bethan John; Editing by Hugh Lawson)