Japan's Private Sector Service Activity Soars

A private-sector survey released on Monday revealed that Japan's services activity expanded at a record pace in April, aided by an increase in consumer spending following the lifting of COVID-19 pandemic restrictions.

The final au Jibun Bank Japan Services purchasing managers' index (PMI) increased to a seasonally adjusted 55.4 in April, up from 55.0 in March.

For the seventh month in a row, it was higher than the flash reading of 54.9 and well above the 50-point threshold that separates expansion from contraction.

"Strong increases in travel, leisure, and tourism spending underpinned another month of swift recovery for the Japanese economy as the impact of COVID-19 continued to fade," said Tim Moore, economist at S&P Global Market Intelligence.

"There were also many reports citing a sales boost from the recovery in international tourist arrivals and subsequent improvement in new business from abroad," he added.

On Saturday, Japan ended strict COVID-related border control measures that required vaccination certificates or negative tests in the hopes of easing airport congestion before the start of a week-long holiday.

In addition, the government decided to reclassify COVID-19 as an infectious disease level comparable to seasonal flu.

In March, 1.82 million people visited Japan, the highest number since the COVID-19 pandemic.

According to the survey, new orders increased at the fastest rate on record, citing a strong rebound in travel and tourism spending.

Business optimism for the coming year also remained high, with the subindex reaching a new high.

"Around four times as many service providers anticipate increased activity as those anticipate decreased activity," Moore said.

The employment subindex expanded for the third month in a row and at the fastest rate in four years, aided by higher demand and confidence.