TOKYO, Oct 3 Reuters Japan39;s service sector activity expanded for the third straight month in September, but the pace slowed slightly and confidence dipped in a sign of the broader economic strains amid weakness in manufacturing, a private survey showed on Thursday.

The final au Jibun Bank Service purchasing managers39; index PMI declined to 53.1 in September from 53.7 in August, according to index publisher SP Global Intelligence.

It was below the flash reading of 53.9 but above the 50.0 threshold separating expansion from contraction, with the average of the three months to September indicating sustained growth.

The services industry has been a bright spot for the world39;s fourth largest economy, anchoring growth and offsetting some drag from a struggling manufacturing sector.

For September, service companies39; new business growth was in expansion territory for the third consecutive month underpinned by solid demand.

Business confidence also remained relatively upbeat though it sank to a 20month low, mainly as a weak manufacturing sector weighed on aggregate growth in new business.

How the service sector responds in the coming month given downside risks including a stagnating economy will be key to the performance of the wider private sector, said Usamah Bhatti, economist at SP Global Market Intelligence.

Japan39;s economy expanded an by annualised 2.9 rate in the second quarter as steady wage hikes underpinned consumer spending. Capital expenditure…