Japan Feb services PMI eases as new order growth slows

Reuters - Activity in Japan's service sector expanded at a slightly slower pace in February as new business growth slowed, suggesting a slight moderation in overall economic growth.

The Markit/Nikkei Japan Services Purchasing Managers Index (PMI) fell to 51.7 in February on a seasonally adjusted basis from 51.9 in the previous month.

But the index remained above the 50 threshold that separates expansion from contraction for the 17th consecutive month.

The index for new business eased to 51.9 from 52.2 in February. Companies hired more staff to deal with a backlog of unfilled orders, but the pace of job creation was the lowest in three months.

"The pace of expansion in Japanese service sector output was broadly unmoved in February, ticking fractionally lower overall," said Joe Hayes, economist at IHS Markit, which compiles the survey.

"Softer inflationary trends were also apparent in February, with both prices paid and prices charged rising to slower extents."

The price trends suggest the Bank of Japan will continue to have difficulty reaching its 2 percent inflation target, which will reinforce views that it will maintain its massive stimulus programme for some time to come.

The composite PMI, which includes both manufacturing and services, fell to 52.2 from 52.8 in January.

Japan's gross domestic product has expanded for the past eight quarters, the strongest run of growth since the 1980s bubble economy, but a recent large drop in industrial production has raised some questions about how strong the economy will grow in the future.

(Reporting by Stanley White; Editing by Kim Coghill)