LONDON (Reuters) - The nascent recovery in euro zone businesses strengthened in September as order books filled at a faster rate and layoffs slowed to a trickle, surveys showed on Thursday, pointing to very mild growth in the third quarter.
Markit's Euro zone Services Purchasing Managers Index (PMI), a monthly survey of businesses, rose to 52.2 in September from August's 50.7, little changed from a preliminary reading of 52.1. Readings above 50 signify growth.
Growth in services companies, comprising the vast bulk of the euro zone's private sector, increased at the fastest pace since June 2011, offsetting a slightly slower pace of expansion in manufacturing last month.
Germany again led the expansion, while services firms in the bloc's next largest economies - France and Italy - returned to growth after more than a year in the red.
Spanish services businesses, however, disappointed slightly, slipping back into contraction after achieving modest growth in August.
"With the rate of expansion picking up in September, the survey bodes well for ongoing growth in the final quarter of the year," said Chris Williamson, chief economist at PMI compiler Markit.
But he added that the region was not out of the woods yet.
"The political instability that has reared up in Italy is a reminder that there remains plenty of scope for recoveries to be derailed," said Williamson.
Italian Prime Minister Enrico Letta won a confidence vote in parliament on Wednesday after Silvio Berlusconi, facing revolt in his own party, backtracked on threats to bring down the government.
Still, the surveys made positive reading.
The composite PMI's employment index, gauging the labor market in both manufacturing and services, rose to 49.7 from 48.4, signifying the slowest pace of job cuts since January 2012. Private sector companies have not added staff since December 2011.
Williamson said the PMI surveys were consistent with economic growth of around 0.2 percent from July through September, similar to the 0.3 percent reading for the second quarter.
Services companies reported orders coming in at the fastest pace since June two years ago, with the new business index rising sharply to 51.7 from August's 50.1.
The composite PMI, combining both services and manufacturing surveys, picked up to 52.2 last month from 51.5 in August, its best showing since June 2011.
- Detailed PMI data are only available under license from Markit and customers need to apply to Markit for a license.
Reporting by Andy Bruce; Editing by Hugh Lawson