Japan service sector activity slows from 5-month high, PMI shows

TOKYO, Oct 5 : Japan's service sector expanded at a weaker pace in September as business activity and new orders grew more slowly and earthquake disruption dampened demand, a business survey showed on Monday.

• The S&P Global final Japan Services Purchasing Managers' Index (PMI) eased to 51.3 in September from a five-month high of 52.5 in August, a survey by S&P Global showed, worse than a flash reading of 51.6. The 50-mark separates growth from contraction.

• "PMI survey data pointed to a softer expansion of Japan's service sector as the third quarter drew to a close, with businesses signalling slower increases in business activity and new orders," said Annabel Fiddes, Economics Associate Director at S&P Global Market Intelligence.

• New orders rose for a 27th straight month, but the pace eased from August. S&P Global said stronger domestic demand continued to support sales, while new export business fell again at the second-sharpest rate since January 2021.

• Employment increased for a 13th consecutive month and at the fastest pace since February, the survey showed. Companies also reported the strongest rise in backlogs of work in seven months as they sought to expand capacity and fill vacancies.

• Input cost inflation eased to a six-month low but remained elevated by historical standards, with firms citing higher raw materials, oil, labour and food costs. Charges levied by service providers also rose again, though output price inflation softened from August.

• The broader Composite PMI, which includes both manufacturing and services, fell to 52.3 in September from 53.5 in August, its weakest since May.

• The Bank of Japan's quarterly "tankan" survey released on Thursday showed Japanese manufacturers' confidence hit an eight-year high over July-September but non-manufacturers' mood soured, painting a mixed picture of the economy.