Service sector

Japan’s service sector activity contracts for 17th month as recovery stalls

TOKYO, July 5 (Reuters) – Japan’s services sector activity shrank for the 17th straight month in June as the coronavirus dampened domestic and foreign demand, underscoring the sluggishness of the world’s third-largest economy.

The decline in the services industry has kept overall private sector activity contracting for a second month, a sign that the country’s economic recovery is struggling to gather pace despite progress in rolling out the coronavirus vaccine.

The final Jibun Bank Japan Services Purchasing Managers’ Index (PMI) came in at 48.0 seasonally adjusted, up from the previous month’s final level of 46.5 and a flash reading of 47.2.

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That means services activity fell below the 50.0 threshold that separates contraction from expansion for a 17th month, the longest such streak in 27 months to March 2010.

The PMI survey showed companies saw a slower contraction in new business, including from overseas, and grew increasingly optimistic about expectations for the year ahead.

Exceptional business, however, saw a slightly faster rate of decline, suggesting that many service sector businesses are still feeling the pain of the health crisis despite being optimistic conditions would improve over the year. future.

“Companies in Japan’s service sector reported that activity remained subdued as the country continued to battle the latest wave of COVID-19 infections,” said Usamah Bhatti, economist at IHS Markit, which compiles the report. investigation.

“Companies continued to build capacity in anticipation of increased demand, even as the pace of job creation slowed to its lowest level in four months.”

The sectors covered by the survey include transport, real estate, communication, information, business services and consumption, excluding retail trade.

Japan’s Jibun Bank Flash composite PMI index, which is calculated using both manufacturing and services, was 48.9 in June, the second consecutive month of a restrictive reading.

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Reporting by Daniel Leussink; Editing by Sam Holmes

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