The services sector in Japan increased at its fastest rate in three months in January, but rising inflation and employment trends indicate challenges ahead, according to a business survey on Friday, as officials bet on the country’s economic reopening to boost demand.
The final au Jibun Bank Japan Services purchasing managers’ index (PMI) increased in January to a seasonally adjusted 52.3 from 51.1 in December, the fastest rate since October.
The actual number was below the flash reading of 52.4, but it nevertheless remained above the 50-mark that distinguishes growth from contraction for the fifth month running.
“The start of 2023 saw a continuation of the recent positive news in the Japanese service sector as the economy continues to recover from the pandemic,” said Andrew Harker, economics director at the pollster S&P Global Market Intelligence.
Thanks to Japan’s loosened border controls, the country had over one million tourists arrive for the first time since February 2020 in December, driving up the sub-indexes for new orders and demand from overseas consumers for a fifth consecutive month. Despite this, international demand slowed marginally last month.