ROME (Reuters) - - Italy's service sector shrank for the first time in three months in December, a sign consumers are still tightening their belts amid the country's third recession in six years, a survey showed on Tuesday.
The Markit/ADACI Business Activity Index for services companies ranging from bars to banks fell to 49.4 in December from 51.8 in November, dropping below the 50 mark that separates expansion from contraction.
The decline in activity was underpinned by shrinking new business and a decline in business expectations, pushing the overall figure below all estimates in a Reuters poll of 5 analysts that produced a median forecast of 52.0.
The survey is another piece of bad news for the euro zone's third-biggest economy. Unemployment is above 13 percent, a record-high level, and Markit's sister survey on manufacturing shrank at its fastest pace in 19 months in December.
That helped drag Markit's composite index combining services and manufacturing down to 49.4 in December, the first time it has contracted in three months.
Services "made little to no contribution to growth in the final quarter which, alongside a slight downturn in manufacturing, suggests the private sector economy has more or less stagnated," Markit economist Phil Smith said.
(Reporting by Steve Scherer; Editing by Toby Chopra)