Japan’s service sector activity contracts at a faster pace in July

TOKYO, Aug.4 (Reuters) – Service sector activity in Japan contracted at a faster pace in July to contract for the 18th consecutive month as restrictions put in place to fight a resurgence in infections coronavirus have taken a toll on business activity and confidence.

Activity and new business inflows have contracted at a faster pace as the spread of the coronavirus has undermined the prospects for the recovery of the world’s third-largest economy, hurting both confidence and sales.

The final purchasing managers index (PMI) at Jibun Bank Japan Services fell to 47.4 seasonally adjusted from the final level of 48.0 in the previous month, and compared to a flash reading of 46.4 .

The reading marked the 18th month in which services activity fell below the 50.0 threshold that separates contraction from expansion, the longest such streak in a 27-month period until March 2010 .

“Japan’s service economy has reported that demand conditions remain subdued,” said Usamah Bhatti, an economist at IHS Markit, who is compiling the survey.

“Declining demand has led Japanese service providers to downsize for the first time since December 2020.”

Japan on Friday decided to extend the state of emergency to three prefectures close to the Olympic host city of Tokyo and the western prefecture of Osaka, posing new potential headwinds for service sector activity. future.

But the survey still showed companies remain optimistic about conditions for the next 12 months, even though they were slightly less positive than the month before.

The final PMI at Jibun Bank Flash Japan Composite, which is calculated using both manufacturing and services, edged down to 48.8 from 48.9 in June. (Reporting by Daniel Leussink; Editing by Sam Holmes)

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