Japan’s service sector activity increases for first time during pandemic

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People walk at a level crossing in the shopping district of Shibuya, amid the coronavirus disease (COVID-19) pandemic, in Tokyo, Japan, August 7, 2021. REUTERS / Androniki Christodoulou / File Photo

TOKYO, Nov. 4 (Reuters) – Activity in Japan’s service sector increased for the first time in 21 months in October as consumer confidence rebounded after the coronavirus pandemic ended, building momentum generalized on demand.

In September, the government ended state of emergency restrictions imposed to contain the health crisis, as new cases and deaths declined rapidly that month and the burden on the medical system eased. .

“Japanese service sector companies have reported that business has returned to expansion territory for the first time in nearly two years,” said Usamah Bhatti, an economist at IHS Markit, who compiled the survey.

“Businesses have continued to build capacity in anticipation of a gradual recovery in demand, despite the rate of job creation reaching its lowest level in three months.”

The final purchasing managers index (PMI) at Jibun Bank Japan Services rose to seasonally adjusted 50.7 from 47.8 the previous month, corresponding to a flash reading.

This means that service sector activity remained above the 50.0 threshold that separates contraction from expansion for the first time since January 2020, before the economy went through its deep recession linked to COVID. -19.

The 20-month decline was the longest such streak in a 27-month period until March 2010, during the global financial crisis.

Some economists are hoping that a stronger recovery in service sector sentiment will offset a slowdown in production and exports, which are hit by a persistent global shortage of chips and parts supply.

The PMI survey showed that the service sector saw the biggest increase in input prices since November 2019, while new and open business remained in contraction despite the expansion of overall business activity.

The composite PMI, which is calculated using both manufacturing and services, rose for the first time in six months to 50.7 from 47.9 in September.

Reporting by Daniel Leussink; Editing by Sam Holmes

Our Standards: The Thomson Reuters Trust Principles.


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