By Maria Martinez
BERLIN (Reuters) - Business activity in the German services sector declined in January for the fourth consecutive month due to weakness in demand, a survey showed on Monday.
The HCOB final services Purchasing Managers' Index (PMI) fell to 47.7 in January from 49.3 in December, pointing to a faster contraction in activity.
"One painful fact is that new business has shrunk for the seventh month straight and its downward momentum gained pace for the second successive month," said Cyrus de la Rubia, chief economist at Hamburg Commercial Bank.
Inflationary pressures meanwhile remained persistently strong. Costs rose at the fastest rate for eight months, driven by wage increases, the report said.
"Unlike in the manufacturing sector, the service sector remains firmly entrenched in inflationary territory," de la Rubia said.
There was continued resilience in employment. Firms' willingness to retain staff tallied with improving expectations for activity in the year ahead. According to the report, sentiment ticked up for the second month in a row to the highest since May last year.
The composite PMI index, which comprises services and manufacturing, remained in contraction territory for a seventh straight month, falling to 47.0 from 47.4 in the previous month.