TOKYO: Japan’s services sector expanded at its fastest pace in five months in August, as stronger domestic demand lifted business activity and new work, a private survey showed on Thursday.
The S&P Global final Japan Services Purchasing Managers’ Index (PMI) rose to 52.5 in August from 51.2 in July, a survey by S&P Global showed. The 50-mark separates growth from contraction.
New business increased for a 26th straight month and at a faster pace than in July, helped by strong underlying customer demand. New export business, however, contracted for a fifth month at the sharpest rate since November 2020.
Employment rose for a 12th consecutive month but only marginally, marking the slowest pace of job creation in a year. Annabel Fiddes, Economics Associate Director at S&P Global Market Intelligence said: “The latest PMI data suggests that growth momentum picked up across Japan’s service sector in August.”
Input cost inflation eased to a four-month low but remained among the fastest of the past 3-1/2 years, while output charges rose at the second-steepest rate on record as firms passed costs to clients. The sustained cost pressures indicate “official inflation could rise further in the coming months and, alongside stronger growth, strengthens the case for another Bank of Japan interest rate hike,” Fiddes said.
Business confidence improved from July but remained subdued by recent standards. The broader Composite PMI, which includes both manufacturing and services, rose to 53.5 in August, its strongest pace in six months, from 52.7 in July.
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