Japan’s Service Sector Sees Second Consecutive Month of Growth
Solid Demand and Expansion Drive Activity
Japan’s service sector has reported its second consecutive month of expansion, driven by robust demand and business growth, according to a recent private-sector survey. The au Jibun Bank Service purchasing managers’ index (PMI) rose to 50.9 in December, up from 50.5 in November, indicating a sustained period of growth.
New Business and Employment on the Rise
The survey, compiled by S&P Global Market Intelligence, revealed a significant increase in new business, with the subindex reaching its highest level in four months. This growth was largely driven by the acquisition of new customers, particularly in the domestic market. Additionally, employment rates continued to rise, marking 15 consecutive months of growth, as firms hired more employees to support their expansion plans.
Business Sentiment Remains Positive
Despite a slight softening in optimism from November, business sentiment remained positive in December, with firms expressing confidence in the growth of demand and activity over the coming year. However, the rate of inflation remained high, largely due to rising labor and raw material costs, which were passed on to clients.
Composite PMI Rises
The composite PMI, which combines manufacturing and service activity, rose to 50.5 in December, up from 50.1 in November. This increase suggests that the service sector is playing a significant role in driving Japan’s economic growth.
Central Bank to Watch Overseas Developments
The Bank of Japan (BOJ) is set to hold its next policy meeting on January 23-24, and Governor Kazuo Ueda has emphasized the need to monitor overseas developments, particularly the policies of the U.S. President-elect. The BOJ’s rate-hike odds have been bolstered by the recent data, which suggests that the service sector is gaining momentum.
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