Global economy contracts for third month-JP Morgan

LONDON, Sept 4 (Reuters) - The global economy contracted for the third consecutive month in August, and while the pace of contraction was slower than July, the outlook remained gloomy, a survey showed on Thursday.

The Global Total Output Index, produced by JP Morgan with research and supply management organisations, was 49.7 in August. That was higher than July's 49.0 but still below the 50 mark that divides growth from contraction.

"With the activity, new orders and employment indexes remaining at relatively low levels in August, conditions are unlikely to improve significantly in the near future," said David Hensley, a director at JP Morgan.

The global new business index contracted for the third consecutive month, particularly in manufacturing, but costs eased with the input prices index posting its lowest reading for five months.

"Recent declines in oil and commodity prices are starting to filter through to some manufacturers and service providers, slowing the pace of overall cost increases," Hensley said.

The United States service sector expanded slightly in August, creeping above the 50.0 mark to 50.6 from July's 49.5, while Russia's service industry also saw robust growth.

Meanwhile, Japanese manufacturing output fell to the greatest extent since late-2001, while government restrictions in place during the Olympics meant that Chinese manufacturing production declined at the sharpest rate in the survey's history.

Global manufacturing data published on Tuesday showed activity at its weakest in five years as production slowed sharply.

The index combines survey data from countries including the United States, Japan, Germany, France, Britain, China and Russia. (Reporting by Jonathan Cable, editing by Swaha Pattanaik)