By Catherine Hornby
ROME, Oct 5 (Reuters) - Italy's services sector grew for a second month in September and by slightly more than expected as new orders rose, although growth was very modest and companies resumed shedding staff, a survey showed on Tuesday.
The Markit/ADACI Business Activity Index -- which covers businesses from hotels to insurance brokers -- slipped marginally to 51.3 in September after a jump to 51.4 in August.
The September reading was above the median expectation of 50.8 in a Reuters survey.
"The pace of recovery was only marginal," said Markit economist Andrew Self. "Although growth was primarily driven by a higher intake of new orders, this was supported through renewed discounting," he added.
An equivalent survey of Italian manufacturers last week showed the manufacturing sector grew at its slowest pace in seven months in September as firms continued to shed jobs, adding to signs that the sector's recovery is past its peak.
In the services sector, companies resumed job cuts in September after modestly increasing employment in August, with survey respondents also citing a trend to not replace staff leaving the company.
New business increased slightly, with the orders sub-index rising to 50.7 from 50.5, but panellists said new orders often resulted from discounts.
Average prices charged in the sector started to decline again after August's mild increase in tariffs.
Despite only a modest rise in activity and new orders in September, firms in the sector remained confident that business activity would be higher a year from now.
The survey indicated that optimism in September was at its highest since April, helped by hopes for economic recovery.
Italy's economy grew by 0.4 percent in the first quarter and 0.5 percent in the second quarter of this year. Last week, Italy's Treasury raised its forecast for growth in 2010 to 1.2 percent, up from a previous estimate in May of 1.0 percent.
However, it cut its forecast for economic growth in 2011 to 1.3 percent, from 1.5 percent previously. (Editing by Susan Fenton)