PARIS, Feb 5 Reuters France39;s service sector continued to contract in January, dragged down by weak demand and marking the longest downturn in over a decade, a survey among business executives showed on Monday.

The HCOB France final purchasing managers index PMI for the services sector, compiled by SP Global, stood at 45.4, down from 45.7 in December well below the 50 level that marks growth. An earlier flash estimate came in at 45.0 points.

Weak demand conditions and client hesitancy weighed on activity and new business inflows, according to the poll, leading to a further depletion of backlogs of work.

New business overall and from abroad are still on the decline and employment is hovering close to the stagnation threshold, said Norman Liebke, Economist at Hamburg Commercial Bank.

However, optimism for future business picked up again in January, as SP39;s Future Activity subindex came in at its highest reading since August.

According to anecdotal evidence, optimism stems from hopes of interest rate cuts this year, said Liebke.

A composite final PMI, combining data from the services and manufacturing sectors, dipped to 44.6 points from 44.8 last month.

Reporting by Tassilo Hummel; Editing by Toby Chopra

Source Reuters