ROME, Oct 3 (Reuters) - Business activity in Italy's service sector shrank in September for a second month in a row, as new business continued to contract, a survey showed on Friday.
The Markit/ADACI Business Activity Index for the service sector, covering companies from hotels to insurers, slipped to 48.8 in September, below the 50 mark denoting growth, from 49.8 in August.
The result was below all forecasts in a Reuters survey of 13 analysts, which pointed toward a slight fall to 49.6. The sub-index for new business came in at 49.8, nearly the same level as August, which was 49.7. A sub-index measuring companies' outstanding business fell to its lowest level since January, Markit said.
Markit's sister survey on manufacturing showed business activity unexpectedly expanded in September after shrinking in August, according to data published earlier this week. On Friday, Markit said its composite index combining the services and manufacturing PMI fell to 49.5 from 49.9, its
second consecutive contraction after eight months of growth.
"Weakness in demand was evident as new business intakes went down another notch, which in turn pressured businesses into making further notable reductions to their charges," Phil Smith, economist at Markit, said.
Italy, in its third recession in six years, is going through a slump that the government says has now led to an economic contraction deeper than the Great Depression of 1929 with the south of Italy particularly severely affected.
The government said on Tuesday it expected economic output to decline by 0.3 percent this year, making it the third consecutive year of contraction for the euro zone's third-biggest economy.
(Reporting by Steve Scherer; Editing by Toby Chopra)