Japan Aug services PMI shows expansion at weakest pace in six months

TOKYO (Reuters) - Japan's services sector expanded in August at the slowest rate in six months as the pace of new orders eased, a private survey showed on Tuesday in a sign the economy is losing some momentum after this year's solid gains.

The Markit/Nikkei Japan Services Purchasing Managers Index (PMI) fell to a seasonally adjusted 51.6 from 52.0 in July.

The index remained above the 50 threshold that separates expansion from contraction for the 11th consecutive month but was at the lowest level since February.

The new business index also showed expansion at a reduced pace, slipping to 52.4 in August from 52.7 in July.

In another sign of caution, the index for business sentiment fell to 52.4 in August from 54.3 in the previous month to reach the lowest level in more than a year.

"Although growth of the service sector eased during August, wider expansion of the Japanese economy remains entrenched in a fairly decent growth range heading towards the final month of the third quarter," said Paul Smith, senior economist at IHS Markit, which compiles the survey.

"However, a slide in service sector confidence to a 13-month low provides a little concern that growth could continue to falter in the near-term."

The composite PMI, which includes both manufacturing and services, rose to 51.9 in August from 51.8.

The PMI survey comes after data last week suggesting a downward revision to gross domestic product growth in the second quarter due to soft capital expenditure.

Many economists expect that consumer spending, business investment and exports will continue to support Japan's economy, but the growing threat of North Korea's nuclear programme could easily dent sentiment and curb growth.