Italy's service sector sees stronger growth in July, PMI shows

ROME (Reuters) -Italy's service sector expanded for an eighth month running in July and at a slightly faster pace than the month before, a survey showed on Tuesday, offering hope for firmer growth in the euro zone's third-largest economy.

The HCOB Purchasing Managers' Index (PMI) for services rose to 52.3 in July from 52.1 in June, comfortably above the 50.0 threshold that separates growth from contraction.

A Reuters survey of eight analysts had pointed to a reading of 52.6.

"This modest acceleration reflects a sector that remains resilient, underpinned by steady domestic demand and a cautiously improving outlook," said Nils Müller, an economist at Hamburg Commercial Bank AG.

Nonetheless, new export business declined for the 12th straight month, reflecting ongoing fragility in global demand, he added. 

Growth in new business eased for a third month running, with the related subindex slipping to 51.4 from 52.0, the weakest reading in six months, while the services employment subindex fell to 52.3 from 52.8.

HCOB's sister survey for the manufacturing sector, published last week, showed contraction for a 16th straight month in July but at a considerably slower rate than the month before.

The composite PMI, combining manufacturing and services, rose to 51.5 in July from 51.1 in June, the highest reading since May.

The Italian economy unexpectedly shrank 0.1% in the second quarter from the previous three months, after the government in April halved its 2025 growth estimate to 0.6% amid mounting uncertainty due to U.S. tariffs.

(Reporting by Antonella Cinelli; Editing by Hugh Lawson)