Japan’s Services Sector Still in Contraction, But Pace of Contraction Slows Down
The services sector in Japan continued to contract into the month of March as the coronavirus pandemic, but the pace of contraction eased to the lowest levels seen in more than a year as the government eased some of the restrictions. The final au Jibun Bank Japan Services PMI improved to a seasonally adjusted 48.3 in March from 46.3 during February, coming in higher than the prelim reading of 46.5 as well.
However, the PMI reading remained below the 50-threshold, indicating contraction, for 14 straight months – revealing the trouble that the Japanese economy suffered even before the pandemic struck. The slight improvement in the reading, however, came on the back of a lower reduction in business activity and new orders.
While this may offer some reason to cheer, the situation could worsen in the current month as a fresh wave of infections has forced the government to announce emergency measures once again. A sudden spike in cases once again has forced businesses to reduce their working hours while some leisure activities have been curbed.
On a positive note, however, the outlook among services sector companies has improved for the coming 12 months, rising at the fastest pace seen in nearly eight years. Businesses remain hopeful of an improvement in domestic as well as external demand on the back of COVID-19 vaccine rollout programs.
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