Japan's Service Sector Activity Grows at Fastest Rate in Over 8 Years: PMI

Japan's Service Sector Activity Grows at Fastest Rate in Over 8 Years: PMI
A man wearing a protective mask, amid the coronavirus disease (COVID-19) outbreak, makes his way at a restaurant district in Tokyo on Dec. 1, 2021. (Kim Kyung-Hoon/Reuters)

TOKYO—Japan's services sector activity expanded at the fastest pace in over eight years in June as the easing of coronavirus curbs boosted sentiment among businesses such as those in tourism.

The pick-up in activity is welcome news for a government betting on domestic demand to put the world's third-largest economy firmly on a recovery track and help overcome production pressures on the country's manufacturing industry.

The final au Jibun Bank Japan Services purchasing managers' index (PMI) rose to a seasonally adjusted 54.0, marking the fastest pace of expansion since October 2013.

That was stronger than May's final 52.6 growth, though it remained below a 54.2 flash reading for June released last month.

"Japanese service sector firms reported a solid increase in activity," said Usamah Bhatti, economist at S&P Global Market Intelligence, which compiles the survey.

Greater demand for services and rising fuel and raw material prices, however, caused firms' average input prices to increase at a record pace. Survey data goes back to September 2007.

"This pushed firms to raise prices charged for services at the quickest rate since October 2019," said Bhatti.

A resurgence in COVID-19 cases overseas, especially in Japan's major trading partner China, hindered international sales, according to the survey.

It also showed the fifth straight month of job growth in the services sector, though the rate of job creation was softer than in May.

The composite PMI, which is estimated using both manufacturing and services, rose to 53.0 from the prior month's final of 52.3, growing at the fastest rate in seven months.

By Daniel Leussink