Italy's services sector expanded for a fifth month running in May at roughly the same pace as the month before, a survey showed on Wednesday, compensating for weak manufacturing activity in the euro zone's third-largest economy.

The HCOB Purchasing Managers' Index (PMI) for Italian services came in at 54.2 in May, fractionally down from 54.3 in April but still comfortably above the 50 level that separates growth from contraction.

"The Italian service sector continues to grow strongly," said HCOB analyst Tariq Kamal Chaudhry. "The growth seems to have a solid foundation and is likely to continue marching forward," he added.

However, the reading was below a median forecast of 54.5 in a Reuters survey of 14 analysts.

The PMI survey's new business sub-index stood at 53.3 in May, down from 54.9 in April, while the employment indicator edged up to 54.1 from 53.9.

In contrast to service providers, the PMI for Italy's smaller manufacturing sector, released on Monday, pointed to contraction for a second month running in May, and at the steepest rate this year.

The composite Purchasing Managers' Index, combining services and manufacturing, declined to 52.3 in May from 52.6 in April, still above the key 50 threshold for a fifth consecutive month.

The Italian economy grew by 0.3% in the first quarter from the previous three months, data showed last week, following 0.1% growth in the fourth quarter of 2023.

Analysts expect similar modest growth rates over the rest of the year, yielding full year 2024 growth of between 0.7% and 1%. (Reporting by Angelo Amante; editing by Gavin Jones and Christina Fincher)