ROME (Reuters) - Business activity in Italy's service sector unexpectedly shrank in August for the first time in five months, dragged down by a decline in new business, a survey showed on Wednesday.
The Markit/ADACI Business Activity Index for the service sector, covering companies from hotels to insurers, slipped to 49.8 in August, below the 50 mark denoting growth, from 52.8 in July.
The median forecast in a Reuters survey of 10 analysts was for a reading of 52.0. The sub-index for new business came in at 49.7, down from 53.2 in July, marking its first contraction in eight months. A sub-index measuring companies' future expectations fell to its lowest level this year, Markit said.
Markit's sister survey on manufacturing shrank for the first time in more than a year in August, according to data published
earlier this week.
On Wednesday, Markit said its composite index combining the services and manufacturing PMI fell to 49.9, its first
contraction in nine months.
Italy, the euro zone's third-biggest economy, fell back into recession for the third time since 2008 in the second quarter, contracting 0.2 percent, statistics office ISTAT confirmed last week.
"The chances of GDP returning to growth in the third quarter appear slimmer," Phil Smith, economist at Markit, said.
Italy has grown more slowly than any other country in the currency bloc over the past decade and most economists expect it to again post little or no growth this year.
(Reporting by Steve Scherer; Editing by Hugh Lawson)