German services sector activity rose in January - PMI

BERLIN (Reuters) - German services sector activity rose in January for the first time in seven months and companies showed increased optimism, a survey showed on Friday.

S&P Global's final services Purchasing Managers' Index (PMI) rose to 50.7 from 49.2 in December, going above the 50.0 threshold that separates growth from contraction.

"A slight rise in services activity in January indicates that the German economy has started the year on a more stable footing and reduces the chances of a technical recession," said Phil Smith, economic associate director at S&P Global, though demand remains under pressure from high prices and tightening financial conditions.

Inflows of new business fell in January, extending the decline that began in June last year, although the rate of contraction slowed notably since December, the survey showed.

Regarding employment, January saw a slight acceleration in the rate of job creation across Germany's service sector to the quickest since last July. According to Smith, this underscores the continued resilience of the German labour market.

The German composite PMI index, which comprises both the services and manufacturing sectors, rose to 49.9 in January from 49.0 in December, only a touch below the neutral level of 50.0.

(Reporting by Maria Martinez; Editing by Toby Chopra)