ROME Italy's manufacturing sector contracted in October for a seventh consecutive month, a survey showed on Thursday, amid persistent declines in output and new orders in the euro zone's third-largest economy.

The HCOB Global Purchasing Managers' Index (PMI) for Italian manufacturing fell to 44.9 from 46.8 in September, again coming in well below the 50 mark that separates growth from contraction and posting the lowest reading for three months.

The reading was below the median forecast of 46.2 in a Reuters survey of 15 analysts.

"The recession in the manufacturing sector steepens ... manufacturing is set to decline 0.5% in the fourth quarter of 2023," said HCOB economist Norman Liebke.

The manufacturing output sub-index fell to 44.9 from a previous 47.4, while new orders declined to 40.3 from 43.2 -- both firmly in the sub-50 territory indicating contraction.

"Italian manufacturers are stuck in a rut with weak demand. Uncertainty surrounding the economic climate is clearly weighing on order book volumes, which shrank for the seventh month running," Liebke said.

The Italian economy stagnated in the third quarter, national statistics bureau ISTAT reported on Tuesday, after contracting by 0.4% in the April-June period.

(Reporting by Angelo Amante; editing by Gavin Jones and Christina Fincher)