Pandemic woes keep Japan's service sector in decline at start of third quarter - PMI

TOKYO Japan's service sector contracted for the sixth consecutive month in July, suggesting that economic activity continued to be pressured by the coronavirus crisis as the third quarter began.

Jibun Bank Japan's final Service Purchasing Managers Index (PMI) rose to 45.4 seasonally adjusted in July, just an encouraging change from 45.0 in June and a preliminary reading of 45.2.

The survey highlights the continuing struggle facing the world's third-largest economy, as the pandemic paralyzes activity and hurts customer demand, although business expectations for businesses turned positive for the first time in five months.

"While there were some positive signs in terms of domestic sales, much of the service sector was affected by fragile customer demand and project cancellation due to the pandemic," said Tim Moore, director of IHS Markit, who compile the survey.

"As a result, service providers commented on the need to reduce fixed overhead and the aversion to replacing outgoing staff."

The overall index remained below the 50.0 threshold that separates contraction from expansion for the sixth month, the longest from an eight-month period through September 2011.