Italy services growth strengthens in July as cost pressures ease, PMI shows

ROME, Aug 5 (Reuters) - Growth in Italy's service sector strengthened in July and cost pressures continued to ease, a survey showed on Friday, offering some encouraging signs for the euro zone's third-largest economy.

• S&P Global's Purchasing Managers' Index (PMI) for the service sector rose to 52.5 from June's 50.2, moving further above the 50 threshold that separates growth from contraction.

• A Reuters survey of 14 analysts had pointed to a reading of 51.3.

• The services PMI had posted three successive sub-50 readings between March and May, following the U.S.-Israeli attack on Iran at the end of February.

• The survey's measure of input cost inflation fell for a second month running in July to 61.2 from 62.1, after a three-and-a-half-year peak of 66.7 in May.

• The employment sub-index rose to 52.7 from 50.4.

• The new business indicator climbed to 53.9 from 51.0, posting its highest reading this year.

• The Italian economy has held up better than many analysts expected in the first half of this year, with gross domestic product rising by 0.3% in the first quarter and 0.2% in the second.

• Giorgia Meloni's government in April forecast full-year 2026 growth of 0.6%, but the budget watchdog UPB on Tuesday issued a significantly more upbeat projection of 0.9%.

• S&P Global's sister survey for Italy's smaller manufacturing sector, released on Monday, showed growth slowing in July.

• However, the composite PMI, combining manufacturing and services, rose to 52.5 in July - the highest level since November last year - from 50.8 in June, indicating a fourth consecutive month of expansion.

(Reporting By Gavin Jones; Editing by Toby Chopra)