TOKYO: Japan’s services sector extended its robust growth in October, despite the slowest growth in new orders in 16 months and a resurgence in inflationary pressures, a private-sector survey showed on Thursday.
The S&P Global final Japan Services Purchasing Managers’ Index (PMI) slipped slightly to 53.1 in October from 53.3 in September, maintaining a seventh consecutive month above the 50.0 mark, which separates growth from contraction.
The October reading overshot the flash figure of 52.4.
While the headline index indicated a solid increase in service sector activity, the sub-index data showed a deceleration in new order growth to a 16-month low.
The slowdown in new orders was coupled with a continued decline in foreign demand, which has been falling for four months, although at a slower rate than in September.
Inflationary pressures intensified as both input costs and output charges rose at faster rates in October. Respondents cited growing expenses for labour, raw materials, food and fuel as key drivers behind the sharper rise in operating expenses, according to the survey.
Business confidence softened from September’s eight-month high. Employment in the service sector increased for the second consecutive month, but the pace of job creation eased.
“Firms expressed caution around the outlook and concerns over labour shortages and relatively subdued customer demand,” said Annabel Fiddes, Economics Associate Director at S&P Global Market Intelligence.
The broader economic picture showed a modest increase in overall business activity, as the final S&P Global Japan Composite PMI edged up to 51.5 in October from 51.3 in September, offset by a sharper fall in factory output.
© New Straits Times Press (M) Bhd
