Japan Sept PMI survey shows services grow at much slower pace

TOKYO, (Reuters) - Japan's services sector expanded in September at a much slower pace compared with the previous month as new business slackened in a sign that domestic demand ended the third quarter on a soft note.

The Markit/Nikkei Japan Services Purchasing Managers Index (PMI) fell to a seasonally adjusted 51.4 in September from 53.7 in August, which was the highest since October 2013.

The index remained above the 50 threshold that separates expansion from contraction for the sixth consecutive month.

The index for new business eased slightly to 51.7 from 52.9 in the previous month, showing growth slowed for two consecutive months.

Slowing activity in the services sector could increase concern about the economy after an unexpected decline in August industrial production raised the risk that the economy slipped into recession.

Government data suggest that consumer spending and the labour market are holding up, but worries about exports and the manufacturing sector could increase the chance of some form of fiscal or monetary stimulus from Japanese policymakers.

(Reporting by Stanley White; Editing by Shri Navaratnam)