TOKYO (Reuters) – Japan’s service activity expanded for a third straight month in January, helped by a rebound in new export business on Asian demand, a private-sector survey showed on Wednesday.
The final au Jibun Bank Service purchasing managers’ index (PMI) rose to 53.0 in January from 50.9 in December, the highest level since September last year, the survey compiled by S&P Global Market Intelligence showed.
It was higher than a flash reading of 52.7 and stayed above the 50.0 threshold separating expansion from contraction for a third straight month.
“The strength of the service sector continued to underpin growth of the overall private sector,” said Usamah Bhatti, economist at S&P Global Market Intelligence.
Firms were confident about their business outlook, “with hopes underpinned by an expected recovery in manufacturing output and a broad-based economic recovery,” he said.
The services industry has been a bright spot for Japan’s economy, offsetting some of the weakness in the manufacturing sector.
The subindex of new business expanded for a seventh consecutive month in January and grew to the same level seen in July last year, the survey showed. Firms said that new client wins and store openings contributed to the rise in the new business.
Export growth supported overall demand in January with new export business expanding for the first time in four months to its strongest level since last August, thanks to demand across Asia.
Firms’ business expectations stayed upbeat in January supported by new contract and business expansion plans as well as more hiring, the survey found. Employment expanded for a 16th straight month to meet business requirements.
Rising wages, increasing fuel and raw material costs boosted input prices in January. As a result, prices charged grew to the highest since last May as firms passed on rising costs.
The composite PMI, which combines manufacturing and service activity, grew to 51.1 in January, the strongest expansion since September last year.
The Bank of Japan raised interest rates to their highest for Japan in 17 years at last month’s meeting when policymakers discussed the likelihood of further rate hikes with some warning of upside inflation risks.
(Reporting by Kaori Kaneko; Editing by Sam Holmes)
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