The services sector in Japan contract at a slightly accelerated pace in March, the latest survey from Markit Economics showed on Friday, with a PMI score of 48.4.
That’s down marginally from 48.5 in February, and it remains solidly beneath the boom-or-bust line of 50 that separates expansion from contraction.
“Reflecting a stagnation in new business, service sector output in Japan contracted for the second straight month in March. Subsequently, service providers reduced their staff numbers in March, albeit at a fractional rate,” said Markit economist Amy Brownbill.
Activity declined for the second month running, while new orders stagnated. Subsequently, service providers continued to reduce their staffing numbers in March, albeit at a slight pace.
Meanwhile, cost pressures were evident, as purchasing costs increased and at a faster rate than the previous month.
Although only moderate, the rate of contraction was faster than the average since the higher sales tax was implemented in April 2014. Panelists mentioned a slowdown in sales volumes and a fall in contracts leading to the latest decline in activity.
The composite index also came in with a score of 48.4, down from 50.0 in the previous month.
Total new orders at Japanese goods producers contracted for the first time since May 2014 in March, albeit at a fractional pace. Subsequently, service providers reduced their staff numbers for the second successive month in March.
Similarly, in the manufacturing sector, employment levels declined in March for the first time since September 2014. Reflective of the overall contraction in business activity, volumes of unfinished work at Japanese services firms were depleted for the first time since December 2014 in March. Manufacturers also reported a fall in backlogs in March.
“Cost pressures were evident, as purchasing costs increased amid reports of the weak yen/dollar rate driving up raw material costs. Despite service sector activity remaining in contraction territory, prospects for growth in activity over the next 12 months remained positive, with service providers signalling a robust level of business sentiment,” Brownbill said.
The material has been provided by InstaForex Company – www.instaforex.com