German service sector activity contracts in October - PMI

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People walk on a shopping street in the southern German town of Konstanz

People walk on a shopping street in the southern German town of Konstanz January 17, 2015.REUTERS/Arnd Wiegmann/File Photo Acquire Licensing Rights

BERLIN, Nov 6 (Reuters) - The German service sector slipped back into contraction in October amid persistent weakness in demand, a survey showed on Monday.

The HCOB final services Purchasing Managers' Index (PMI) fell to 48.2 in October from 50.3 in September, sliding back below the 50 level that signals growth in activity.

The service sector's performance continued to be undermined by a lack of incoming new work, the survey showed.

"This downturn in new work has been ongoing since July, thus it looks like we are in for a few tough months," said Cyrus de la Rubia, chief economist at Hamburg Commercial Bank.

There continued to be only limited spillover to the labour market, however, with employment decreasing just fractionally.

October's survey showed that service providers were only cautiously optimistic about the year-ahead outlook for activity, with concerns about the wider economy and persistent inflationary pressures dampening confidence.

The composite PMI index, which comprises services and manufacturing, fell to 45.9 in October from 46.4 in September, signalling a slightly quicker rate of contraction of private sector business activity overall.

"Higher interest rates, a new war in the Middle East and higher oil prices are not exactly the mix for a bright future," de la Rubia said.

Reporting by Maria Martinez; Editing by Hugh Lawson

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