Japan’s service sector activity grew at the fastest pace in more than eight years in June as the easing of coronavirus curbs boosted confidence in businesses such as those in tourism.
The pick-up in activity is good news for a government betting on domestic demand to put the world’s third-largest economy firmly on the road to recovery and help overcome production pressures on the country’s manufacturing industry.
The final Purchasing Managers’ Index (PMI) at Jibun Bank Japan Services reached 54.0 seasonally adjusted, marking the fastest pace of expansion since October 2013.
That was stronger than May’s 52.6 end-line growth, although it remained below a flash reading of 54.2 for June released last month.
“Japanese service-sector companies reported a solid increase in activity,” said Usamah Bhatti, an economist at S&P Global Market Intelligence, which compiles the survey.
Increased demand for services and rising fuel and raw material prices, however, led to a record rise in average business input prices. Survey data dates back to September 2007.
“This has pushed companies to increase prices charged for services at the fastest rate since October 2019,” Bhatti said.
A resurgence in COVID-19 cases overseas, particularly in Japan’s main trading partner China, has hampered international sales, the survey said.
It also showed the fifth consecutive month of employment growth in the services sector, although the rate of job creation was weaker than in May.
The composite PMI, which is estimated using both manufacturing and services, rose to 53.0 from the previous month’s finish of 52.3, rising at the fastest pace in seven months.