Japan’s Service Sector Contracts At Slower Pace In June

Japan’s service sector continued to contract in June as the activity was disrupted by the latest wave of COVID-19 infections, but the pace of decline in services activity slowed from May, survey data from IHS Markit showed on Monday.

The au Jibun Bank services Purchasing Managers’ Index rose to 48.0 in June from 46.5 in May. A score below 50 indicates contraction.

New business inflows fell for the seventeenth month in a row in June. Foreign demand for services declined at a softer pace in June.

Meanwhile, employment levels increased for the fifth straight month at the end of the second quarter due to capacity expansion.

Japanese service providers registered a further rise in average cost burdens in June. That said, the increase was only marginal and the softest for four months. At the same time, service providers reported a marginal rise in output charges for the third month in a row.

Firms in the Japanese service sector were increasingly confident that activity would rise over the coming year.

The au Jibun Bank Japan composite output index – which measures combined output in the manufacturing and service sectors, edged up to 48.9 in June from 48.8 in May.

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