Japan’s service sector grew at a slower pace in September as business activity and new orders eased, while disruption from an earthquake weighed on demand.
The S&P Global final Japan Services Purchasing Managers’ Index (PMI) fell to 51.3 in September from 52.5 in August, which was a five-month high. The reading was also below the flash estimate of 51.6, although a reading above 50 indicates expansion.
“PMI survey data pointed to a softer expansion of Japan’s service sector as the third quarter drew to a close, with businesses signalling slower increases in business activity and new orders,” said Annabel Fiddes, Economics Associate Director at S&P Global Market Intelligence.
New orders increased for a 27th consecutive month, although growth slowed from August. S&P Global said stronger domestic demand continued to support sales, while new export business declined at the second-fastest pace since January 2021.
Employment rose for a 13th straight month and at its fastest pace since February, while backlogs of work recorded their strongest increase in seven months as companies sought to expand capacity and fill vacancies.
Input cost inflation eased to a six-month low but remained elevated by historical standards, with businesses reporting higher raw material, oil, labour and food costs. Service providers also continued to raise charges, although the pace of output price inflation moderated from August.
The broader Composite PMI, covering both manufacturing and services, fell to 52.3 in September from 53.5 in August, marking its weakest reading since May.
The Bank of Japan’s quarterly tankan survey released last Thursday showed Japanese manufacturers’ confidence reached an eight-year high in the July-September quarter, although sentiment among non-manufacturers weakened, pointing to a mixed picture for the economy.
Reuters
