TOKYO (Reuters) – Japan’s service sector activity contracted at the fastest pace in five months in January, a sign that businesses have come under pressure from a record rise in new coronavirus infections due to the Omicron variant.
The world’s third-largest economy has seen COVID-19 cases rise in recent weeks, forcing the government to roll out tougher restrictions across much of the country in response to a surge in hospital admissions caused by Omicron.
The final Jibun Bank Japan Services Purchasing Managers’ Index (PMI) fell to a seasonally adjusted 47.6 from 52.1 the previous month and a flash reading of 48.8.
That marked the fastest decline in business activity since August, while ongoing business saw the steepest rate of reduction in four months, the survey showed.
Services companies have cut staff at the fastest pace in 20 months and have become less optimistic about increased activity over the next year, with positive sentiment hitting a five-month low, according to the report. ‘investigation.
Growth in input prices for the sector remained elevated, suggesting that pressure on corporate earnings from global commodity inflation continued.
The private sector as a whole also continued to see charges increase.
“Weakness in the broader services sector contributed to broad stagnation in private sector output in January,” said Usamah Bhatti, an economist at IHS Markit, which compiles the survey.
“Total business activity plunged into contractionary territory for the first time since September, despite a nearly eight-year high in manufacturing output growth.”
The composite PMI, which is calculated using both manufacturing and services, fell to 49.9 from December’s close of 52.5.
(Reporting by Daniel Leussink; Editing by Sam Holmes)
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