Japan’s Service Activity Grows Amid Strong Demand, PMI Reports
Japan’s service sector shows growth for the second month, driven by strong demand and business expansion, according to a recent survey.
Tokyo, Japan, Service Activity, PMI, Business Expansion, Inflation
TOKYO: So, it looks like Japan’s service sector is on the upswing! In December, it expanded for the second month in a row, thanks to solid demand and some business growth. A private survey shared the good news on Monday.
The final au Jibun Bank Service PMI climbed to 50.9 in December, up from 50.5 in November. While it was a bit lower than the earlier estimate of 51.4, it still shows that things are looking up since it’s above the 50.0 mark that indicates growth.
An economist from S&P Global Market Intelligence, Usamah Bhatti, mentioned that December was a positive month for the service sector. There were consistent increases in both business activity and new business, which is always a good sign.
Interestingly, the new business subindex rose for the sixth month straight, reaching its highest level in four months. This growth was mainly driven by new customers coming in, especially from the local market.
On the employment front, things are also looking good. Jobs grew for the 15th month in a row, although the pace has slowed a bit compared to November. Companies are hiring more folks to keep up with their expansion plans.
Business sentiment remains positive, even if it’s slightly less optimistic than last month. Companies are hopeful that demand and activity will keep growing in the year ahead.
However, inflation is still a concern. It stayed high in December, mainly due to rising labor and raw material costs. Companies are passing these costs onto their clients, but the prices charged remained steady from the previous month.
When you look at the composite PMI, which combines both manufacturing and service activity, it also rose to 50.5 in December from 50.1 in November. So, overall, it seems like the service sector is holding its own.
With service-sector inflation picking up, it’s got people talking about potential rate hikes from the Bank of Japan. The BOJ is keeping an eye on global developments, especially with the new U.S. President-elect Donald Trump in the picture.
Mark your calendars! The BOJ’s next policy meeting is set for January 23-24, and it’ll be interesting to see what they decide.
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