(Corrects to add dropped word in first paragraph)
April 5 (Reuters) - Japan's services sector activity
grew at the fastest pace in over nine years in March, a private
sector survey showed on Wednesday, suggesting that the
post-COVID bounce was gathering steam and providing some offset
to a still-weak factory sector.
The final au Jibun Bank Japan Services purchasing managers'
index (PMI) rose to a seasonally adjusted 55.0 last month, from
February's 54.0, marking the quickest rate of expansion since
October 2013.
It was also higher than the flash reading of 54.2 and well
above the 50-mark that separates expansion from contraction for
a seventh straight month.
"The Japanese services economy signalled a sharp improvement
in demand conditions at the end of the first quarter of 2023 as
the dissipating impact of the COVID-19 pandemic and stronger
customer confidence combined to boost output and orders," said
Usamah Bhatti, economist at S&P Global Market Intelligence.
The subindexes of new orders and overseas demand grew for a
seventh month, rising at the fastest pace since February 2019
and December 2022, respectively.
The survey was an encouraging sign for Japan's post-COVID
economic recovery, and provides some offset to the manufacturing
PMI released on Monday which showed factory activity still in
contraction last month even as the downturn eased somewhat.
Business confidence for the coming year logged a 31-month
streak of improvement, the quickest rate since June 2022, with
the survey citing positive sentiment on hopes for an extended
improvement in post-pandemic conditions.
The number of visitors to Japan ticked down 1% to 1.47
million in February but showed continued "robust recovery,"
according to the national tourism agency. In May, the country
will also end its existing COVID-19 border controls for
international visitors to launch a voluntary testing programme
at airports.
However, higher costs in fuel, commodity and labour as well
as a weaker yen caused firms' average input prices to increase
consecutively since December 2020, though the rate was the
softest since last January.
"Inflationary pressures remain a key downside risk in Japan,
notably as official statistics point to the sharpest rise in
inflation in over 40 years, a marked change from the
deflationary period over the recent past," Bhatti said.
The subindex for employment expanded for a second month and
at the fastest pace in ten months, as workloads and business
expansion plans increased.
The composite PMI, which combines the manufacturing and
services figures, grew at the fastest pace since June 2022. The
index rose to 52.9 in March from the previous month's 51.1,
staying above the break-even 50 mark for three consecutive
months.
(Reporting by Eimi Yamamitsu
Editing by Shri Navaratnam)
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