TOKYO: Japan’s service sector activity grew at the fastest pace in more than two years in November on the back of a jump in new business, signaling stronger consumer confidence as the coronavirus pandemic subsided.
The world’s third-largest economy has lagged other advanced nations in its recovery from the pandemic’s hit with the coronavirus dampening crimping activity for parts of the year.
Jibun Bank Japan’s final Services Purchasing Managers’ Index (PMI) rose to a seasonally adjusted 53.0 from the previous month’s 50.7 and flash reading of 52.1.
This marked the fastest pace of expansion since August 2019.
“New orders rose for the first time since January 2020 as panel members indicated that the lifting of state of emergency measures had boosted confidence and sales,” said Usamah Bhatti, economist at IHS Markit, who compiles the survey.
“Despite growing demand and evidence of pressure on capacity, Japanese service providers have cut staff for the first time since July.”
Greater spending on restaurants, overnight stays and other services would likely support Japan’s economy as a continued global shortage of chips and soaring commodity prices put pressure on manufacturers.
“Manufacturers and service companies reported significant increases in cost pressures in November,” Bhatti said.
The composite PMI, which is estimated using both manufacturing and services, rose at the fastest pace in more than four years, rising to 53.3 from October’s finish of 50.7.
(Reporting by Daniel Leussink; Editing by Sam Holmes)