Japan's Services Economy Gains Momentum as Demand Picks Up

 

Japan's service sector returned to growth in November, driven by improving demand, according to a private survey released Wednesday.

The final au Jibun Bank Services Purchasing Managers' Index (PMI), compiled by S&P Global Market Intelligence, rose to 50.5 in November from 49.7 in October, exceeding a preliminary reading of 50.2. A reading above 50.0 indicates expansion.

"The services sector saw a renewed upswing in November, as stronger demand boosted output and new business activity," noted Usamah Bhatti, economist at S&P Global Market Intelligence.

New business growth continued for the fifth consecutive month, reflecting increased confidence and expansion plans among firms. Optimism about the future reached its highest level since July, with businesses expecting client acquisitions and growth initiatives to drive demand further.

Employment grew at its fastest pace in four months, while outstanding business saw its strongest growth in eight months, according to the survey.

However, inflationary pressures persisted due to rising fuel, labor, and logistics costs. Businesses passed these costs on to clients, leading to the steepest increase in prices charged in six months.

Bhatti added that firms anticipate easing inflation and reduced global uncertainties will provide a much-needed boost to the private sector.

The composite PMI, which includes both manufacturing and services, rose to 50.1 in November from 49.6 in October, signaling a slight overall expansion.

The data comes ahead of the Bank of Japan's policy meeting on Dec. 18-19, where economic indicators will be closely scrutinized. BOJ Governor Kazuo Ueda recently told the Nikkei newspaper that the timing for an interest rate hike is "approaching," as the economy aligns with central bank forecasts.

 

 

 

 

 

 

 

Paraphrasing text from "Reuters" all rights reserved by the original author.