BERLIN, July 3 (Reuters) - Activity in Germany's private sector contracted in June at the same pace as in May, as orders continued to slide albeit at a slower pace than a month earlier, a key survey showed on Friday.
Final figures from the purchasing managers index (PMI) showed a headline composite measure of business activity held at 44.0 in June, though it remained below the 50 mark separating contraction from expansion for a 10th month running.
A separate measure tracking new business in both the manufacturing and services sector increased to 42.9 in June from 42.0, but that too meant only the pace of contraction had eased.
The composite index covers both Germany's manufacturing and service sectors. The headline PMI for the service sector also held steady in June at 45.2, as did its business expectations sub-index, which held at 54.5.
"The fastest reductions in business activity were signalled by companies in the hotels and restaurants and transport and storage sectors," Markit Economics, which compiles the data, said of the services sector.
"Anecdotal evidence from survey respondents suggested that weak economic conditions and a subsequent drop in client demand were the main factors leading to lower levels of activity in June," it added.
A final manufacturing PMI measure, released on Wednesday, rose to an 8-month high in June, though at 40.9 it is still far from returning to growth.
Measures of investor and corporate sentiment have rallied in recent months, raising hopes the economy could see some growth soon and pull out of its worst recession since World War Two.
Business sentiment rose to a seven-month high in June, while analyst and investor sentiment is expected to have risen for the eighth month running.
In the latest data to back up the rosy sentiment, retail sales rose for a third straight month in May as lower inflation spurred spending, although a leading retail group warned that sales would shrink this year as job losses pile up.
The government expects the economy to contract a record 6 percent in 2009.
(Reporting by Brian Rohan; Editing by Victoria Main)