The services sector in Italy recorded its sixth month of growth in June, despite a marginal decline in new business activity.

The HCOB Purchasing Managers' Index (PMI) for Italian services reached 53.7 last month, a slight dip from May’s reading of 54.2, but surpassing the 50-mark that separates growth from contraction.

In addition, the new business sub-index also fell slightly to 53.0 from 53.3 in May, whilst employment fell to 53.1 from 54.1.

Meanwhile, Italy's manufacturing sector PMI indicated contraction for the third consecutive month, which brought the composite PMI, combining services and manufacturing, down to 51.3 from 52.3, Finimize reports.

This indicates growth, albeit at its slowest pace since February. Italy’s budget watchdog noted that the nation's GDP likely grew by 0.3% in Q1 this year, with full-year growth expected to be between 0.7% and 1%, mirroring last year's growth rate of 0.9%.

In regard to the latest PMI data, economist at Hamburg Commercial Bank, Dr Tariq Kamal Chaudhry said: “Italian services remain the economic powerhouse of the nation. Despite a slight decline from the previous month, the HCOB Services Business Activity Index remains robust at 53.7, indicating significant growth. The data does reveal some underlying concerns such as rising prices and fading growth momentum in output and new business, which should be taken into account when assessing the outlook. Nevertheless, the surveyed companies maintained an optimistic view regarding future activity.”

He went on to say: “Growth of employment and total orders remain historically strong. Despite a slight moderation from the previous month, Italian service providers continued to hire robustly. However, companies report that economic conditions, especially on the international front, are becoming increasingly more challenging, which led non-domestic sales growth to cool. 

“Optimism is unwavering among service providers. It's unmistakable from the data that Italian service companies view future activity quite positively. The degree of confidence is approaching its historical average. Newly acquired customers, improved economic conditions including lower interest rates, and new projects have been cited as reasons by surveyed companies for their optimistic outlook,” he added.