| Consensus | Actual | Previous | Revised | |
|---|---|---|---|---|
| Composite Index | 50.0 | 49.7 | 48.9 | 48.9 |
| Services Index | 51.7 | 51.1 | 50.3 | 50.3 |
Highlights
Business conditions in the services sector picked up slightly in December after being nearly flat in November and expanding in the previous two months, according to the latest survey by S&P Global. The Japanese government's new travel discount program and eased Covid border control, both of which took effect in October, continued supporting the tourism industry and some retailers.
There is some caution, going forward, as Japan had already entered the eighth wave of the pandemic by late November and its peak is projected to be around mid-January.
On a seasonally adjusted basis, the purchasing managers' index for the services sector rose to a final 51.1 in December (revised down from an initial 51.7) after slipping to 50.3 in November from 53.2 in October. The latest level is below 52.2 in September but above 49.5 in August and 50.3 in July. The index surged to 54.0 in June from 52.6 in May. The index is above 50.7 recorded in April and 49.4 in March and recent lows of 44.2 in February and 47.6 in January recorded during the Omicron storm.
Service providers raised their selling prices at the fastest pace in over three years, and the fourth-highest on record, S&P said."While some firms simply increased prices to reflect higher input costs, others took advantage of the strong demand conditions and raised prices in an attempt to boost profitability," it said.
The composite output PMI, which is calculated from both the manufacturing and services indexes, rose to a final 49.7 in December from 48.9 in November, but it was revised down from the initial reading of 50.0, the breakeven point, marking the second straight month of contraction following a rise to 51.8 in October from 51.0 in September, 49.4 in August and 50.2 in July. The index remains below 53.0 in June, 52.3 in May, 51.1 in April and 50.3 in March, but is above 45.8 seen in February and 49.9 in January.
Import cots for various goods remain elevated but have eased somewhat as the yen has appreciated slightly against the dollar.
Optimism across the private sector economy was broad-based with the degree of confidence for the year ahead at manufacturing firms matched by that of service providers, S&P said.
There is some caution, going forward, as Japan had already entered the eighth wave of the pandemic by late November and its peak is projected to be around mid-January.
On a seasonally adjusted basis, the purchasing managers' index for the services sector rose to a final 51.1 in December (revised down from an initial 51.7) after slipping to 50.3 in November from 53.2 in October. The latest level is below 52.2 in September but above 49.5 in August and 50.3 in July. The index surged to 54.0 in June from 52.6 in May. The index is above 50.7 recorded in April and 49.4 in March and recent lows of 44.2 in February and 47.6 in January recorded during the Omicron storm.
Service providers raised their selling prices at the fastest pace in over three years, and the fourth-highest on record, S&P said."While some firms simply increased prices to reflect higher input costs, others took advantage of the strong demand conditions and raised prices in an attempt to boost profitability," it said.
The composite output PMI, which is calculated from both the manufacturing and services indexes, rose to a final 49.7 in December from 48.9 in November, but it was revised down from the initial reading of 50.0, the breakeven point, marking the second straight month of contraction following a rise to 51.8 in October from 51.0 in September, 49.4 in August and 50.2 in July. The index remains below 53.0 in June, 52.3 in May, 51.1 in April and 50.3 in March, but is above 45.8 seen in February and 49.9 in January.
Import cots for various goods remain elevated but have eased somewhat as the yen has appreciated slightly against the dollar.
Optimism across the private sector economy was broad-based with the degree of confidence for the year ahead at manufacturing firms matched by that of service providers, S&P said.
Market Consensus Before Announcement
The final data is expected to confirm the initial estimate of the service sector and overall business conditions released in December.
Business conditions in the services sector picked up slightly in December after being nearly flat in November and expanding in the previous two months. The Japanese government's new travel discount program and eased Covid border control, both of which took effect in October, continued supporting the tourism industry and some retailers. There is some caution, going forward, as Japan had already entered the eighth wave of the pandemic by late November and its peak is projected to be around mid-January.
The flash services PMI rose to 51.7 in December after slipping to a final 50.3 in November from 53.2 in October.
The composite output PMI, which is calculated from both the manufacturing and services indexes, rose to the breakeven point of 50.0 in December after slumping to a final 48.9 in November. Import costs for various goods remain elevated but have eased somewhat as the yen has appreciated slightly against the dollar.
Business conditions in the services sector picked up slightly in December after being nearly flat in November and expanding in the previous two months. The Japanese government's new travel discount program and eased Covid border control, both of which took effect in October, continued supporting the tourism industry and some retailers. There is some caution, going forward, as Japan had already entered the eighth wave of the pandemic by late November and its peak is projected to be around mid-January.
The flash services PMI rose to 51.7 in December after slipping to a final 50.3 in November from 53.2 in October.
The composite output PMI, which is calculated from both the manufacturing and services indexes, rose to the breakeven point of 50.0 in December after slumping to a final 48.9 in November. Import costs for various goods remain elevated but have eased somewhat as the yen has appreciated slightly against the dollar.
Definition
The Japan Composite Purchasing Managers Index (PMI) is based on original survey data collected from a representative panel of companies based in the Japanese manufacturing and service sectors. The Composite PM is a weighted average of the Manufacturing Output Index and the Services Business Activity Index, and is based on original survey data collected from a representative panel of about 800 companies based in the Japanese manufacturing and service sectors. Survey responses reflect the change, if any, in the current month compared to the previous month based on data collected mid-month.
Description
Investors need to keep their fingers on the pulse of the economy because it dictates how various types of investments will perform. By tracking economic data such as the purchasing managers' manufacturing indexes, investors will know what the economic backdrop is for the various markets. The stock market likes to see healthy economic growth because that translates to higher corporate profits. The bond market prefers less rapid growth and is extremely sensitive to whether the economy is growing too quickly and causing potential inflationary pressures.
