Olympics helps Brazil service sector improve in July

BRASILIA, (Reuters) - Rising demand for hotel and restaurant services ahead of the Olympic Games helped ease the downturn in Brazil's service sector in July, a private survey showed on Wednesday.

The Purchasing Managers Index (PMI) for Brazilian services, compiled by research firm Markit, rose on a seasonally adjusted basis to 45.6 in July from 41.4 in June. The 50 mark of the index separates contraction from expansion.

The slower contraction in both services and manufacturing activity boosted Markit's Composite Index to 46.4 in July from 42.3 in June.

For a country struggling with its worst recession in generations the Olympics will likely provide only little economic relief and may actually prove costly to the host city Rio de Janeiro, according to analysts' estimates.

Rio de Janeiro expects to attracts half a million visitors to the first Olympics games to be hosted in South America that will start on Friday.

July's pace of contraction in new business volumes for service providers was the weakest in the sequence of 17 monthly drops. The sector continued to shed jobs in July, but at slower pace than in previous months.