PMI of the services sector of Japan in January rose to its highest in four months

Business activity in Japan’s service sector in January returned to growth as new orders increased at the fastest rate in seven months, data showed Markit/Nikkei.

the PMI (Purchasing Managers Index, PMI) in the services sector of Japan in January increased from December’s level of 49.4 to 51 percent. The index peaked in September of last year, but was below the flash estimate of 52.1 points.

a reading below 50 points reflect reducing activity, a higher activity.

the Acceleration of growth in new orders to a maximum of seven months was a key factor in supporting business activity in Japan. Against this background, in January, there was a noticeable growth of employment in the service sector.

“stronger growth in demand and employment gives us some confidence that short-term economic Outlook is not as bad as feared at the end of last year,” said Markit economist at IHS Joe Hayes.

meanwhile, business sentiment fell to its lowest level since August of 2017 amid concerns about the aging population and weak economic conditions.

Consolidated PMI, covering both manufacturing sector and service sector, in January, jumped to 50.1 points from 48.6 in December. The indicator pointed to a rise in business activity for the first time in four months.

Many analysts expect the third largest economy in the world declined in the fourth quarter of 2019. The spread of a new type of coronavirus creates additional risk to growth prospects.

“Although the Olympic games in Tokyo will serve as a stimulus for economic activity this year, companies do not pay attention to time factors and show the first signs of concern about the potential growth of Japan,” said Hayes.