The services sector in Japan continued to expand in December, albeit at a slower pace, the latest survey from Jibun Bank revealed on Thursday with a services PMI score of 52.1.
That’s down from 53.0 in November, although it remains above the boom-or-bust line of 50 that separates expansion from contraction.
The Japanese service sector witnessed a softer expansion at the end of 2021. Both the activity and new orders indices signaled softer, yet still moderate rates of growth in December, as businesses continued to report a steady recovery in demand.
Despite firmer demand conditions, firms struggled to fill available vacancies, which contributed to a further slight reduction in employment. Moreover, concerns about the potential for new variants of COVID-19 clouded the 2022 outlook for business activity, with the degree of optimism softening to the lowest for three months.
The survey also showed that the composite index fell to 52.5 in December from 53.3 in November.
The average reading in the final quarter marked the strongest quarterly performance since the fourth quarter of 2018. Both manufacturing and services firms reported a softening in growth rates in December.
Aggregate new orders were also increased for a third consecutive month, despite growth easing slightly from November. That said, stronger demand placed additional pressure on private sector capacity as outstanding business rose at the fastest rate for three-and-a-half years.