Japanese service sector shrinks at the fastest pace in 5 months: PMI

Tokyo — Japan’s service sector activity shrank at its fastest pace in the five months of January, with signs of pressure from a record surge in new coronavirus infections from Omicron variants.

In the world’s third-largest economy, the number of cases of COVID-19 has skyrocketed in recent weeks, forcing the government to develop stricter regulations in most of the country in response to the increase in hospitalizations by Omicron. It has been.

au Jibun Bank’s final Japan Service Purchasing Managers Index (PMI) plummeted from 52.1 and 48.8 flash readings last month to seasonally adjusted 47.6.

This showed the fastest decline in business activity since August, while the best businesses showed the sharpest decline in four months.

According to the survey, service companies lost their optimism that they would cut headcount at the fastest pace in 20 months and increase activity next year, with positive sentiment hitting a five-month low.

Input price growth in this sector continues to rise, suggesting continued pressure on corporate profits from global raw material inflation.

The cost burden continues to increase in the private sector as a whole.

Usamah Bhatti, economist at IHS Markit, who summarized the study, said:

“Although manufacturing output has grown for nearly eight years, total business activity has fallen into a shrinking territory for the first time since September.”

The compound PMI calculated using both manufacturing and services dropped from 52.5 in the finals of December to 49.9.