Activity in Japan’s services sector expanded slightly in July as companies worked off business backlogs and as new orders showed signs of steadying after a sharp decline in June, a private business survey showed on Wednesday.
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Employment was broadly unchanged in both the manufacturing and service sectors during July, as indicated by the respective indices recording only fractionally above the crucial 50.0 threshold.
The expansion was driven mainly by a rebound for factory output that followed 16 consecutive months of contraction.
The data gathering effort behind the Caixin PMI puts more emphasis on light industry than the NBS index analysis, which gives greater weight to heavy industry employers.
“Implementation of supportive measures (by authorities) including proactive fiscal policies must continue to protect the recovery, and regulations in the services sector should be further relaxed”, Zhong said.
The PMI sub-index for services rose to a two-month high of 54.4 in July from 53.7 in June. It was the first time that services employment had fallen for four months.
Beijing has been counting on a growing services sector to pick up the slack as it tries to restructure the economy and cut overcapacity in industrial sectors such as steel and mining. An “improved hiring trend suggests firms have gained sufficient confidence in the durability and sustainability of the upturn to expand capacity in increasing numbers”. With growth of manufacturing production also quickening, the seasonally adjusted Nikkei India Composite PMI Output Index also climbed to a three-month high of 52.
A reading above 50 indicates economic expansion, while a reading below 50 points toward contraction.
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The Caixin services PMI is calculated by Markit, a global financial information services provider, based on data from monthly replies to questionnaires sent to purchasing executives at more than 400 companies.
