The services sector in Japan witnessed the fastest contraction during March seen since the 2008-09 financial crisis as global demand took a severe hit because of the coronavirus pandemic. The au Jibun Bank Japan Services PMI reading for March fell sharply to 33.8 from 46.8 in February, the lowest level since February 2009.

New business fell to an eight-year low while business expectations among service sector firms contracted at the fastest pace in a decade. Business closures and cancellation of events at clients’ ends also drive strain in the services sector.

Employment in the sector also slipped into negative on account of layoffs of workers as a result of the decline in business activity. This was the first time employment in the services industry registered a decline since 2016.

Japan’s composite PMI, which includes the performance of both the manufacturing as well as the services sector, declined to 36.2 in March from a final reading of 47 in the previous month. This was the lowest reading for the composite PMI in 11 years.