TOKYO (Reuters) – Japan’s service sector activity grew at a slower pace in December as growth in new and in-progress business slowed and expectations for the next 12 months hit their lowest level in four months.
The world’s third-largest economy is set to rebound in the final quarter of last year after COVID-19 cases plummeted as it seeks to catch up with other advanced nations in its recovery from the pandemic hit.
The final index at the Jibun Bank Japan Services Purchasing Managers’ Index (PMI) fell to a seasonally adjusted 52.1 from 53.0 the previous month, which was the highest since August 2019.
The figure compared to a flash reading of 51.1.
“Japanese service-sector companies reported a sustained expansion in business conditions at the end of 2021,” said Usamah Bhatti, economist at IHS Markit, which compiles the survey.
“The easing of COVID-19 restrictions allowed customer-facing businesses to operate more freely throughout the final quarter of the year.”
Businesses, however, reported shortages of raw materials and labour, with employment levels falling to a 15-month low, while business optimism for the year ahead improved. at its weakest pace since September.
The private sector as a whole saw the burden of costs rise at the end of the year amid continued material shortages and supply chain delays, Bhatti said.
“Fears that the disruption could carry over into the new year were high,” he added.
The composite PMI, which is calculated using both manufacturing and services, fell to 52.5 from November’s close of 53.3.
(Reporting by Daniel Leussink; Editing by Sam Holmes)
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