According to a private-sector survey released on Monday, Japan’s service activity continued to expand in December, bolstered by robust demand and business growth.
Compiled by the S&P Global Market Intelligence, the final reading of the au Jibun Bank Service PMI rose to 50.9 in December from November’s 50.5. Despite missing a preliminary estimate of 51.4, the index remained in expansion territory for the second consecutive month, maintaining above the critical 50.0 mark.
Usamah Bhatti, an economist at the research firm, noted that December presented a favorable period for Japan’s service sector, characterized by consistent increases in both business activity and new business. The subindex of new business climbed for the sixth consecutive month, reaching its highest point in four months, particularly fueled by domestic market contributions.
In addition, employment persisted in an upward trend for the 15th month in a row, although the growth rate decelerated compared to November. Companies involved in the survey cited workforce increases as part of business expansion plans.
Likewise, though business sentiment remained positive in December, there was a slight dip in optimism compared to November. Companies surveyed expressed hope that demand and activity will increase in the year ahead.
Inflation held steady at elevated levels primarily because of soaring labor and raw material costs, with firms transferring these increased expenses to clients. However, the rate at which prices were charged to clients did not change from November.
The composite PMI, encompassing both manufacturing and service sectors, rose marginally to 50.5 in December from 50.1 in the preceding month, indicating gradual economic recovery.
Japan’s service-sector inflation exhibited an acceleration in November, increasing the likelihood of a rate hike by the Bank of Japan (BOJ), with the next policy meeting scheduled for January 23-24.
Governor Kazuo Ueda emphasized the importance of monitoring international developments, particularly U.S. President-elect Donald Trump’s policy decisions.
