BERLIN (Reuters) - Germany's service sector contracted in November for the first time in nine months as demand conditions continued to deteriorate, a survey showed on Wednesday.
The HCOB final services Purchasing Managers' Index fell to 49.3 in November from 51.6 in October, moving below the 50-point threshold that separates growth from contraction.
Germany's economy has been dogged by weak demand, intensifying competition from abroad and political uncertainty after a budget row brought down the country's three-way coalition last month. Snap elections will be held in February.
"After eight months of growth, the PMI for services dipped into negative territory," said Hamburg Commercial Bank chief economist Cyrus de la Rubia.
"This means it can't make up for the recession in the industrial sector anymore, and the economy might stagnate or even contract in the fourth quarter," he added.
A composite PMI index, which comprises services and manufacturing, fell to 47.2 in November from 48.6 in October.
The report highlighted a continued decline in new business, with firms citing reduced enquiries from the public sector and manufacturers. New export business shrank for the fifth consecutive month, albeit at a slower pace than in October.
The rate of job cuts in the service sector eased slightly, though employment has now declined for five consecutive months - the longest stretch since 2009.
Cost pressures picked up, driven by rising wages, pushing up output price inflation to its highest since April.