Japan’s service sector nearly stagnated in July – PMI

A woman wearing a protective face mask is seen at an outdoor restaurant as the government declared the second state of emergency for the capital and some prefectures, amid an outbreak of the coronavirus disease (COVID-19), in Tokyo, Japan, January 9, 2021. REUTERS/Issei Kato/File Photo

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TOKYO, Aug 3 (Reuters) – Japan’s services sector activity almost completely stagnated in July as rising inflation and growing economic uncertainty weighed on sentiment, while businesses also said the The momentum given by the lifting of the brakes on the COVID-19 pandemic had faded.

The marked slowdown in activity in the sector offered a harbinger that the Japanese economy could struggle to begin a convincing recovery, a worrying trend for a country highly exposed to fluctuations in global growth.

The final Purchasing Managers’ Index (PMI) at Jibun Bank Japan Services fell to a seasonally adjusted 50.3, marking the lowest since March.

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The figure shows that activity is slightly above the 50 mark that separates contraction from expansion.

It was below June’s final of 54.0, which was an over-eight-year high, and a flash reading of 51.2.

“Japan’s services economy signaled that demand conditions broadly stagnated at the start of the second half of the year as the momentum from the broader reopening of the economy faded,” Usamah said. Bhatti, an economist at S&P Global Market Intelligence, which compiles the survey. .

“Panel members noted that weaker economic conditions, partly due to inflation and uncertainty, had weighed on the sector.”

The average cost burdens faced by service companies remained high, hitting the second-highest rate in survey history after June’s record high.

The composite PMI, which is estimated using both manufacturing and services, slipped to a five-month low of 50.2 from June’s final 53.0.

“Overall, private sector activity broadly stagnated in July after June’s solid rise,” Bhatti added.

“A further slump in manufacturing output and the stalling of global new orders contributed to the lower reading.”

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Reporting by Daniel Leussink; Editing by Sam Holmes

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