German services sector downturn eases in August on stronger demand, hiring

BERLIN, Sept 3 (Reuters) - Germany's services sector contracted marginally in August as tougher financial conditions, high costs and customer caution weighed on activity, a business survey showed on Thursday.

The final S&P Global Germany Services Purchasing Managers' Index fell to 49.7 in August from 49.8 in July, coming in well above an initial reading of 48.5.

• Anecdotal evidence provided by surveyed businesses pointed to headwinds from tougher financial conditions, high costs and general reticence among customers.

• "Although the headline index has yet to move into growth territory, we're certainly seeing a more stable picture in terms of business activity across the service sector than a few months back, and there's cause for optimism in the underlying indicators for demand and employment," said Phil Smith, S&P Global Market Intelligence economics associate director.

• New business increased for a second straight month and at a quicker pace than in July. Export sales returned to growth for the first time since February, recording the strongest expansion since May 2023.

• Service providers added staff for the first time in eight months, with the pace of job creation the quickest since October last year.

• "Manufacturing is enjoying a bit of growth spurt, and there are signs that services could soon follow suit," said Smith.

• The final S&P Global Germany Composite PMI, which includes services and manufacturing, rose to 51.8 in August from 51.3 the month before.

• A reading above 50 signals growth, while one below it indicates contraction. The further it goes below 50, the faster the rate of contraction.

(Reporting by Miranda Murray; Editing by Hugh Lawson)