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Italy services sector recovery picks up in Nov

Published 12/03/2010, 03:45 AM
Updated 12/03/2010, 03:48 AM

* Growth accelerates in Italian services sector

* New orders rise, boosted by overseas demand

* Contrasts with weak manufacturing sector in Nov.

By Catherine Hornby

ROME, Dec 3 (Reuters) - Growth in Italy's services industries accelerated in November, as a strong increase in new order levels helped the sector expand at it its fastest pace since April, a closely watched survey showed on Friday.

The Markit/ADACI Business Activity Index, which covers businesses from hotels to insurance brokers, rose to 54.5 in November from 51.0 in October.

November's data was well above a median forecast of 51.4 in a Reuters survey of analysts.

Growth in new business in the services sector accelerated to a seven-month high of 53.2 in November from 50.9 in October, thanks partly to robust overseas demand.

"The strong inflow of new orders also placed pressure on firms' capacity levels, resulting in a mild accumulation of backlogs and a slight pickup in employment," Markit economist Andrew Self said in a statement.

Italian employers in the sector raised staffing numbers in November, for only the second time in the past 26 months, and at the strongest rate since February 2008, Markit said.

The strong services sector PMI contrasted with a weaker picture in the manufacturing sector, which registered its slowest growth since February in November, data showed this week.

It adds to a mixed picture for the euro zone's third-largest economy, which is under close market scrutiny amid signs that its debt may face a concerted market attack.

Economic growth slowed sharply to 0.2 percent in the third quarter after growth of 0.5 percent in the second and 0.4 percent in the first quarter.

Italian services providers continued to cut their average prices charged in November faced with strong competition and discounting attempts to boost sales, although the reduction was weaker than the average over the last 26 months, Markit said.

Most companies in the sector maintained a positive outlook for growth in the coming year, boosted by hopes of economic recovery and new business, though the degree of optimism was the weakest for three months in November.

Tough competition and political instability were among the key reasons cited for pessimism, Markit said.

Italy's centre-right government has been weakened by corruption and sex scandals, coalition infighting and sluggish economic growth, and Prime Minister Silvio Berlusconi faces a confidence vote on Dec. 14 that could lead to early elections. Reuters poll consensus: 51.4 (range 50.5-51.8, 10 participants)

(Editing by Stephen Nisbet)

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