A business survey released on Tuesday revealed that healthy demand for travel and the introduction of new products helped Japan’s service sector activity bounce back in February, continuing advances that had been seen for the past 1.5 years. The economy has benefited from the service sector, which has somewhat countered manufacturing’s decline as a result of weakening global demand. The purchasing managers’ index (PMI) for the final au Jibun Bank Service increased from 53.1 in January to 52.9 in February. The indicator has been over the 50.0 barrier, which separates expansion from contraction, since September 2022, despite a modest slowdown in the trend.
The impetus from activity is expected to continue in the upcoming months, according to S&P Global Market Intelligence economist Usamah Bhatti. With respondents reporting better business conditions, particularly for inbound tourists, the service sector remained stable, but the manufacturing output level declined due to poor demand. A sharp decline in industrial output, Bhatti warned, is having a negative impact on the private sector’s total activity. “It remains to be seen how long the growth momentum provided by the Japanese service sector continues to prop up overall private sector activity,” Bhatti stated.
For the eighth consecutive month, January saw more than 2 million tourists enter Japan, paving the way for what might be a record-breaking year in travel. Japan’s economy greatly depends on inbound tourism; last year, visitor spending surpassed 5 trillion yen ($33.28 billion) for the first time. With the support of new items and robust travel demand, new business reached its highest point in six months. Because more businesses in the service industry employed full-time employees, employment increased at its fastest rate since May.
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