LONDON, Oct 3 Reuters Euro zone business activity slipped back into contraction last month although the downturn was not as steep as initially thought, according to a survey that also showed inflationary pressures had eased.

HCOB39;s composite Purchasing Managers39; Index for the bloc, compiled by SP Global and seen as a good gauge of overall economic health, dropped to 49.6 in September from August39;s 51.0.

That was below the 50 mark separating growth from contraction for the first time since February but was significantly above a preliminary 48.9 estimate.

A PMI covering the euro zone39;s dominant service industry slid to 51.4 last month from 52.9 but was ahead of the 50.5 flash reading.

At first glance, the services sector in the euro zone seems to be holding up fairly well. It39;s still growing, and the slowdown is not too steep just yet, said Cyrus de la Rubia at Hamburg Commercial Bank.

But when you dig a little deeper and look at individual countries, the picture is not as rosy except for Spain.

French service providers39; business activity slowed after the Olympics effect and in Germany and Italy growth almost hit a wall, earlier data showed.

That was despite firms in the region only raising charges marginally last month. The composite output prices index dropped to 51.5 from 53.0, a low not seen since early 2021.

Inflation in the currency union fell to 1.8 in September, below the European Central Bank39;s 2 target and reinforcing an already solid case…