Japan's services sector shrinks for first time in five months in August - PMI

Reuters

Published Sep 04, 2022 08:38PM ET

TOKYO (Reuters) - Japan's services sector activity shrank for the first time in five months in August as a resurgence of COVID-19 infections hurt demand, a business survey showed.

The contraction shows that a recovery of the world's third-largest economy remains fragile at best and is worrying at a time when the global growth outlook is turning increasingly pessimistic.

The final au Jibun Bank Japan Services purchasing managers' index (PMI) dropped to a seasonally adjusted 49.5, marking the first contraction since March.

The figure was slightly better than a 49.2 flash reading but worse than a slight expansion in activity of 50.3 in July. The 50-mark separates contraction from expansion.

"A renewed drop in services activity accompanied a further drop in manufacturing production, with the latter falling at the quickest pace since September 2021," said Annabel Fiddes, economics associate director at S&P Global (NYSE:SPGI) Market Intelligence, which compiles the survey.

"However, service providers noted a weaker drop in output than those seen at the start of 2022, when there was also a spike in infections, as pandemic-related restrictions have been eased notably since then."

Average cost burdens faced by services firms expanded at a marked pace in August due to hikes in energy, fuel and raw material costs, while firms continued to raise their fees modestly.