Japan's service sector activity returned to growth in April after stagnating the previous month, helped by improved orders, a stark contrast to continued weakness in manufacturing, a business survey showed on Wednesday.
The final au Jibun Bank Japan Services purchasing managers' index (PMI) rose to 52.4 in April from the neutral 50.0 level in March. The figure also overshot the flash reading of 52.2.
A reading above 50.0 signals growth in activity, while a figure below that level points to contraction.
The data showed "a fresh increase in service sector activity offset a further decline in factory production in April, to help lift overall private sector output in Japan back into expansion territory," said Annabel Fiddes, Economics Associate Director at S&P Global Market Intelligence, which compiled the survey.
The rebound in service activities helped lift the composite PMI, which combines manufacturing and service sectors, to 51.2 in April from 48.9 in March, surfacing above the 50-line for the first time in two months.
New business in the service sector grew at the fastest pace since May last year, with companies pointing to improved demand. This contrasted with manufacturers, who saw the steepest drop in new orders since February amid U.S. tariff worries.
Despite the upturn in activity, business confidence among service providers weakened for the third consecutive month, falling to its lowest level since January 2021, suggesting the concerns over tariffs on the global economy are broadly shared by Japanese companies.
Input cost inflation accelerated sharply to a 26-month high, with companies reporting higher prices for raw materials, fuel and labour, prompting firms to raise their output charges to maintain margins.
Employment in the service sector increased for the 19th straight month, with the pace of job creation accelerating slightly to a three-month high as companies sought to expand capacity in line with customer demand.
