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Japan Sep service activity shrinks at slowest pace since pandemic's start

Activity in Japan's services sector contracted for the eight straight month in September but at the slowest pace since the coronavirus pandemic started wreaking havoc on the economy

Topics
Japan | Global economy

Reuters  |  TOKYO 

Chefs wearing protective masks wait for customers at Toshirhin restaurant in Tokyo. Photo: Reuters
Chefs wearing protective masks wait for customers at Toshirhin restaurant in Tokyo. Photo: Reuters

TOKYO (Reuters) - Activity in Japan's services sector contracted for the eight straight month in September but at the slowest pace since the coronavirus pandemic started wreaking havoc on the economy, a private business survey showed on Monday, in a sign that demand is starting to steady.

The final Jibun Bank Services Purchasing Managers' Index (PMI) rose to its highest in eight months, coming in at a seasonally adjusted 46.9 from 45.0 in the previous month.

The headline index, while still below the 50 neutral level, was higher than a preliminary reading of 45.6, suggesting conditions were moving closer to stabilisation.

"Overall, there are signs of improvement in the sector, however recovery is far from secure," said Shreeya Patel, economist at IHS Markit, which compiles the survey.

"Demand across the country remains subdued, with tourism and travel restrictions impeding new work volumes across the service sector."

The main reading was pulled down by an accelerated decline in new orders from abroad, with surveyed firms citing depressed demand conditions in export markets as well as the closure of clients' businesses.

However, the survey also showed strong optimism in companies' outlook for the 12 months ahead on hopes of a recovery in demand, pushing the business expectations sub-index to its highest level of the year.

While job shedding continued for a seventh month, the pace of staff cuts was more modest and neared a neutral level.

The results echo a key Bank of survey from last week that showed business sentiment improved in the third quarter from a 11-year low hit three months earlier, in a sign of a gradual economic turnaround.

The composite PMI, which includes both manufacturing and services, rose to 46.6 in September from the previous month's final of 45.2.

 

 

 

(Reporting by Daniel Leussink; Editing by Kim Coghill)

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

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First Published: Mon, October 05 2020. 08:57 IST
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