JAPAN’S January service activity expanded at the strongest pace since September, a business survey showed on Monday (Feb 5), supported by robust demand and the weak yen, while international demand jumped for the first time in five months.

The service sector, which accounts for around 70 per cent of the country’s gross domestic product (GDP), has been a bright spot for the world’s third-largest economy, helping offset some of the drag on manufacturers from weak global demand.

The final au Jibun Bank Service purchasing managers’ index (PMI) rose to 53.1 in January from 51.5 in December, marking the 17th consecutive month of growth, according to index publisher S&P Global Intelligence.

It exceeded the flash reading of 52.7 and remained above the 50 threshold separating expansion from contraction on a monthly basis

“Stronger services activity growth coupled with a softer fall in manufacturing contributed to an increase in overall private sector activity for the first time since last October,” said Usamah Bhatti, economist at S&P Global Market Intelligence.

The jump in business activity was attributed to solid demand and the weak currency, with the pace of growth in new business reaching a four-month high.

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New export business marked the first rise since last August, helped by a boost in inbound tourism, particularly in air travel, according to the poll.

Input price inflation hit a three-month high, due to high fuel and labour prices. But firms were able to pass along some increases, with prices charged increasing at the fastest pace since August last year.

Business confidence for the next 12 months rose to the strongest level since May.

The composite PMI, which combines the manufacturing and service activity figures, climbed to 51.5 in January from 50 in December. REUTERS