July 4, 2018 / 12:40 AM / 9 months ago

Japan June services PMI shows pick-up in activity

Customers have lunch at restaurants next to a record shop which has a large poster on its wall in Tokyo, Japan, July 4, 2018. REUTERS/Kim Kyung-Hoon

TOKYO (Reuters) - Activity in Japan’s services sector accelerated in June from the previous month as new orders grew at a faster pace, a private survey showed on Wednesday, suggesting the economy gained momentum in the second quarter.

The Markit/Nikkei Japan Services Purchasing Managers Index (PMI) rose to 51.4 on a seasonally adjusted basis from 51.0 in May.

The index remained above the 50 threshold that separates expansion from contraction for the 21st consecutive month.

The rise in service sector activity, however, was softer than the average across the 21 months of expansion, and with employment also growing at a slower pace, the survey found.

“Weak client demand seen in May was reversed during the latest survey,” said Joe Hayes, economist at IHS Markit, which compiles the survey. “This should support business activity, at least in the short term.”

The composite PMI, which includes both manufacturing and services, rose to 52.1 from 51.7 in May.

Japanese manufacturing activity grew at a slightly faster pace in June, the final Markit/Nikkei PMI showed, but export orders fell more than initially reported in a worrying sign of the impact of trade protectionism.

Japan’s economy is expected to have bounced back in the second quarter after a contraction in the first quarter, which ended the longest uninterrupted period of growth since the 1980s bubble economy.

But business confidence among the country’s big manufacturers worsened for a second straight quarter in the three months to June amid escalating global trade frictions, a Bank of Japan survey showed this week, while inflation remains subdued and wages are barely rising.

Reporting by Stanley White; Editing by Jacqueline Wong

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