TOKYO (Reuters) – Japan’s service sector activity rebounded in December because of a boom in international and domestic tourism as COVID curbs were relaxed, a business survey showed on Friday.
The ultimate au Jibun Bank Japan Services purchasing managers’ index (PMI) rose to a seasonally adjusted 51.1 from November’s 50.3, even though it got here in lower than the flash reading of 51.7 for December.
The index stayed above the 50-mark that separates expansion from contraction for a fourth consecutive month.
The recovery was supported by an increasing variety of international tourists in addition to a reduction campaign for domestic travellers, in keeping with Laura Denman, economist at S&P Global Market Intelligence, which compiled the survey.
Service firms’ demand from overseas increased on the strongest pace since July 2018, the survey showed.
Visitors to Japan jumped to just about 1 million in November, the primary full month after the country reopened its borders to individual tourists, in keeping with government data.
Corporations also benefited from the October start of the National Travel Discount Programme, a government-funded scheme that subsidises trips inside Japan.
“With the government-led programme set to proceed in January, we are able to hope to see activity levels across the Japanese service sector expand in the brand new 12 months,” Denman said.
But inflationary pressures worsened, with each input costs and costs charged rising at rates among the many fastest on record.
“Alongside increasing fuel, electricity and raw material costs, firms reportedly began to feel the consequences of October’s upward minimum wage rate revision in December,” said Denman.
As more firms hike retail prices for food and energy items, Japan’s core consumer prices rose in November on the fastest pace in 1981, bringing down real wages, a barometer of households’ purchasing power.
Prime Minister Fumio Kishida and central bank Governor Haruhiko Kuroda on Wednesday urged higher wage hikes to attain sustained economic growth and inflation, ahead of annual spring wage negotiations between firms and labour unions.
The composite PMI, which mixes the manufacturing and services figures, rose to 49.7 in December from the previous month’s 48.9, because of the robust service-sector activity growth. However the reading stayed below 50-mark that separates expansion from contraction for a second month, after the largest fall in manufacturing activity in 26 months.
(Reporting by Kantaro Komiya; Editing by Kim Coghill)
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