Strong demand lifts Japan’s October service sector activity

Japan saw its service sector activity expand for the first time in 21 months in October. The growth was driven by robust demand as consumer sentiment improved.

The final au Jibun Bank Japan Services Purchasing Managers’ Index (PMI) jumped to a seasonally adjusted 50.7 in October from 47.8 in September. This was the first time the services sector breached the 50.0 threshold, marking its first expansion since January 2020.

It also touched the largest increase in input prices since November 2019. However, an increase in overall activity failed to pull out the new and outstanding business from contraction.

Meanwhile, the composite PMI, which includes both manufacturing and services, increased for the first time in six months. It jumped to 50.7 in October from 47.9 in September.

Economists hoped that the development in the service sector would compensate for weaker output and export that have been declining due to persistent global chip and parts supply shortage.