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Japan service sector growth hits 26-month high in October

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Staff Writer |
Japan service sector
Japan   Nikkei Japan Services PMI

Growth of the Japanese service sector was maintained during October, extending the current sequence of expanding output to 13 months.

This was supported by the sharpest rise in new orders since May 2013.

In turn, firms accumulated further backlogs, while also adding to their payrolls for the tenth month running.

On the price front, although cost pressures continued to build, output price inflation weakened to a mild pace.

The headline index from the survey - the seasonally adjusted Business Activity Index - recorded 53.4 in October, rising from 51.0 in September to indicate a solid rate of expansion.

Furthermore, the degree to which activity increased was the strongest since August 2015.

Meanwhile, output growth in the manufacturing sector quickened to a five-month high.

Consequently, the Nikkei Composite Output Index increased to 53.4 in October, up from 51.7 in September, to signal the joint-quickest rate of growth in 45 months.

The most marked pace of business activity growth for over two years coincided with the sharpest expansion in new business since May 2013.

Evidence provided by panellists indicated that the rise in new orders had underpinned greater activity levels.

New orders placed with Japanese manufacturers rose, however the pace of expansion eased slightly from September.

As was the case with activity, growth of new work was solid.

Stronger demand conditions led to a further rise in backlogs of work.

Latest survey data signalled that outstanding work increased for an eleventh month in a row.

That said, the rate of backlog accumulation eased to the weakest since April.

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