Tokyo: Japan’s service sector showed expansion for the second consecutive month in December, supported by strong demand and business growth, according to a private-sector survey released on Monday. The final au Jibun Bank Service Purchasing Managers’ Index (PMI) rose to 50.9 in December from 50.5 in November, based on data from S&P Global Market Intelligence.
Although the December reading was slightly lower than the flash estimate of 51.4, it remained above the neutral 50.0 mark that separates expansion from contraction, marking the second consecutive month of growth.
“December data revealed a positive month for the Japanese service sector, with sustained rises in both business activity and new business,” said Usamah Bhatti, economist at S&P Global Market Intelligence.
Japan's service activity expanded for a second straight month in December, buoyed by solid demand and business expansion, a private-sector survey showed https://t.co/twjnt6XBTD pic.twitter.com/6CHpeNENny
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The subindex tracking new business saw its sixth straight increase in December, reaching the highest level in four months. This growth was particularly driven by new customer acquisitions, especially from the domestic market.
Employment also continued to rise for the 15th consecutive month, though the rate of growth slowed compared to November. Firms surveyed reported hiring more employees to align with their business expansion plans.
Business sentiment remained positive in December, although optimism eased slightly from November. Companies expressed confidence that demand and activity will continue to grow in the year ahead.
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Inflation remained steady and high in December, primarily due to increased labor and raw material costs. Firms passed on these higher costs to their clients, though the rate of prices charged remained unchanged from November.
The composite PMI, which combines manufacturing and service sectors, edged up to 50.5 in December from 50.1 in November.
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The data also indicated that service-sector inflation picked up in November, which could strengthen the likelihood of a rate hike by the Bank of Japan (BOJ). BOJ Governor Kazuo Ueda noted that the bank must carefully monitor global developments, particularly policies under U.S. President-elect Donald Trump.
The BOJ will hold its next policy meeting on January 23-24.
