The Italian services sector shrank for a fifth consecutive month in December, although the pace of contraction was minimal, a survey showed on Thursday.

The HCOB Purchasing Managers' Index (PMI) for Italian services came in at 49.8 in December, up from 49.5 in November but just below the 50 level that marks growth in activity.

The result was in line with the median forecast in a Reuters survey of eight analysts.

"The prospects for the kick-off into 2024 look pretty sobering. Both total and international orders are on the decline, leading to a predictable dwindling of outstanding business," HCOB said in its report.

"The outlook is particularly clouded by economic uncertainty on the home front and the global economic downturn, along with geopolitical tensions abroad. The start of the year is set to be a challenging period for Italian service providers."

The new business subindex slipped to 48.1 in December from 48.3 in November. However, the employment indicator edged up for a second month running, reaching 51.0 in December from a previous 50.2.

The PMI for Italy's smaller manufacturing sector, released on Tuesday, registered a ninth consecutive month of contraction, signalling persistent weakness in the euro zone's third-largest economy.

The composite Purchasing Managers' Index combining services and manufacturing stood at 48.6 in December from 48.1 in November, below the key 50 threshold for a seventh straight month, Thursday's survey showed.

The Italian economy grew by a marginal 0.1% in the third quarter from the previous three months, national statistics bureau ISTAT said in a December report, after contracting by 0.4% in the April-June period.

ISTAT has also forecast a weak fourth quarter. (Reporting by Crispian Balmer; Editing by Hugh Lawson)