BERLIN, June 21 (Reuters) - The upturn in German business activity over the past two months slowed in June as manufacturing's weakness dragged on a buoyant services sector, a preliminary survey showed on Friday.
The HCOB German flash composite Purchasing Managers' Index, compiled by S&P Global, slid to 50.6 in June from 52.4 in May, falling short of a Reuters poll forecast of 52.7.
The composite index, which tracks the services and manufacturing sectors that together account for more than two-thirds of the euro zone's largest economy, is now only slightly above the 50 mark that separates growth from contraction.
The services sector index eased in June to 53.5, from 54.2 in May.
Manufacturing remained mired in a downturn, tumbling further to 43.4 in June from 45.4 in May. Analysts polled by Reuters had expected the index to rise to 46.4.
"What a sharp dip at the end of the second quarter," said Cyrus de la Rubia, chief economist at Hamburg Commercial Bank.
Manufacturing faces an uphill struggle, he said, as all indicators suggest demand for industrial goods is failing to get off the ground despite an improved global environment.
"Fortunately, Germany's economic performance is not only based on the manufacturing industry, but also on the service sector," which remains in good shape, said de la Rubia.
"The ECB's persistent headache these days is inflation in the service sector," said de la Rubia, citing continued rises in input and sales prices as reason for the European Central Bank to proceed cautiously with interest rate cuts.
(Reporting by Miranda Murray Editing by Christina Fincher)
