BERLIN (Reuters) - Activity in Germany's services sector edged up slightly in September, following a drop the month before, a survey showed on Wednesday.
The HCOB final services Purchasing Managers' Index (PMI) rose to 50.3 in September from to 47.3 in August, rising back above the 50 level that signals growth in activity.
Demand remained weak, however, as signalled by an accelerated pace of decline in new business, with companies using backlogs of work to support activity, the survey showed.
"The recently started downturn in the German services sector looks like it is sticking around for a while," said Cyrus de la Rubia, chief economist at Hamburg Commercial Bank.
Concerns about demand and the economic outlook in general served to dampen services firms' expectations for activity in the coming year, the report showed.
The composite PMI index, which comprises services and manufacturing, rose to 46.4 in September from 44.6 in August, signalling a softer rate of contraction of private sector business activity overall.
With the composite PMI stuck in contractionary territory, de la Rubia said he expected an economic downturn.
"We assume that in Germany recession bells started ringing in the third quarter," the economist said, adding that another GDP drop is expected in the fourth quarter. Two consecutive quarterly contractions are considered a technical recession.