TOKYO -- Japan's service sector output signaled a modest growth in February, increasing for the second consecutive month. The expansion was supported by a sharp rise in new business, as well as a slight pick up in foreign demand.
The Nikkei Japan Services Purchasing Manager's Index, or PMI, increased to 52.3 in February from 51.6 in January; the rise was the strongest since November. Demand conditions improves, with new business rising at the fastest rate since May 2013, while activity growth also quickened to a three-month high. Outstanding workloads increased, which encouraged companies to expand their workforce.
A reading above 50 indicates economic expansion, while a reading below 50 points toward contraction.
Joe Hayes, economist at IHS Markit, which compiles the survey, said that despite struggles in the manufacturing sector, "Japan's service sector remained resilient," adding that the "service providers will play an important role in the coming months if Japan’s economy is to avoid slipping into a downturn."
On the other hand, Hayes also noted that "Against unsupportive global trade conditions and the impending sales tax hike, risks to the Japanese business cycle are mounting. Further stimulus from the Abe administration will be paramount to help the domestic market sustain the buoyancy seen in the latest service sector survey."
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