Daily Management Review

Growth In Japan’s Service Sector In October For The First Time Since Start Of Pandemic


Growth In Japan’s Service Sector In October For The First Time Since Start Of Pandemic
The October, the services sector activity in Japan increased - a first for it in 21 months, with a spike in consumer morale after the subsidence of the coronavirus pandemic, which helped to drive a broad-based surge in demand domestically.
The state of emergency restrictions was lifted in September by the government which was previously imposed to curb the spread of the pandemic, because of a sharp drop in the incidents of new Covid-19 cases and related deaths that month which in turn eased the strain on the medical system.
"Japanese service sector firms reported that activity returned to expansion territory for the first time in nearly two years," said Usamah Bhatti, economist at IHS Markit, which compiled the survey.
"Firms continued to build capacity in anticipation of a gradual recovery in demand, despite the rate of job creation easing to a three-month low."
The final au Jibun Bank Japan Services Purchasing Managers' Index (PMI) increased to 50.7 from 47.8 in the previous month, which matched a flash reading.
That suggested that the services sector activity remained well just over the 50.0 level which is the point that distinguishes between contraction and expansion. This was the first time that the index had crossed that level since January 2020 which was just before the world and the Japanese economy was thrown into the gutter with the onset of the pandemic. 
This depressed services sector activity which went on for 20 straight months was the second longest run ever, eclipsed only by the 27-month depression in activity starting from March 2010 to March 2011, when the global financial crisis was at its peak.
Some experts believe that a sharper recovery in the service sector mood would balance a slowdown in output and exports caused by a protracted global chip and parts supply shortfall.
According to the PMI survey, the surge in input prices in the country’s services sector was noted to be the highest since November of 2019 while, despite the accelerated growth in overall business activity, there was a continued contraction in new and outstanding business in September.
And for the first time in six months, there was an expansion for the composite PMI, which is calculated using both manufacturing and services, increased to 50.7 from September's final of 47.9