Japan’s February service-sector activity grows at fastest rate in eight months – PMI

TOKYO : Japan’s services sector activity grew at the fastest pace in eight months in February, a private sector survey showed on Friday, as the economic impact of the coronavirus pandemic receded globally.

The final au Jibun Bank Japan Services purchasing managers’ index (PMI) rose in February to a seasonally adjusted 54.0 from January’s 52.3.

The final figure was higher than the flash reading of 53.6 and well above the 50-mark that separates expansion from contraction for a sixth straight month.

“The Japanese services economy signalled that demand conditions had improved at a stronger rate during February,” said Usamah Bhatti, economist at S&P Global Market Intelligence.

The subindexes showed new orders and overseas demand grew for a sixth month, with new orders rising at the fastest pace since May 2022.

Outstanding business saw the sharpest rate of growth in five-and-a-half years in February due to the expansion in demand, Bhatti said.

    The survey also showed that business confidence for the coming year improved to a four-month high on the back of stronger economic conditions and the receding impact of COVID, citing expectations for increasing demand in the travel industry.

Japan has seen a recovery in tourism after the government scrapped COVID-19 curbs in October, with data from the national tourism agency showing overseas visitors climbed to about 1.5 million in January.

“Japanese private sector firms remained strongly optimistic that activity would continue to expand over the coming 12 months as the persistent weights of the pandemic and inflation on the economy showed sustained signals of easing,” Bhatti said.

In the service-sector survey, the subindex for employment swung to marginal growth from contraction in the previous month as firms took on new recruits to meet higher demand.

The composite PMI, which combines the manufacturing and services figures, rose to 51.1 in February from the previous month’s 50.7, staying above the break-even 50 mark for two consecutive months.