Japan: Services Sectors PMI Shows Economy Struggling

September 3rd, 2014
in News, econ_news, syndication

Econintersect:  The Markit Japan Services Sector PMI came in at 49.9, just below the neutral reading of 50 for August.  But within the data there was some encouragement:  The Composite Output Index (manufacturing and services combined) was 50.8 in August, up from 50.2 in July.  In manufacturing the higher production reflected an increase in new orders at the highest rate since before the consumption tax was increased by 60% on 01 April.


Follow up:

There is some optimism that the crushing impact of the large consumption tax increase may be starting to fade.  Markit economist Amy Brownbill commented on the Japanese Services PMI survey data:

"Latest PMI data indicated a fall in business activity for Japanese services, although at only a slight pace. New business growth, on the other hand, was sustained for a third month in a row. Furthermore, job creation remained in growth territory amid reports of planned company expansions.

"Therefore, it would seem that the performance of the Japanese service sector will return to positive growth in the near future as the negative effects of the sales tax increase dissipate."



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