Japan's Services Industry Activity Rebounds In October

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Japan's tertiary activity index, which is a measure of activity in the nation's services sector, rebounded in October, official data showed on Wednesday.

The Ministry of Economy, Trade & Industry reported that the tertiary activity index rose a seasonally adjusted 0.5% month-on-month in October, reversing the downwardly revised 0.6% decrease in the previous month. The increase was exactly in line with economists' expectations.

The informations & communications industry recorded the biggest rise in activity, rising 5.6% on a monthly basis in October. Other industries that contributed to the increase include wholesale & retail trade, which rose 0.6%, and electricity, gas, heat supply & water, up 3.2%. Activity in the accommodations, eating & drinking services and learning support industries grew 1.3% and 2.5%, respectively.

On the other hand, activity in the scientific research, professional & technical services industry recorded a 6.4% decline in October, while living-related, personal & amusement services and miscellaneous services also registered decreases. Activity in the medical, healthcare & welfare industry was flat.

On a yearly basis, the tertiary industry activity index slid 4.3% in October, slower than the 4.7% decrease in the preceding month.

These figures will be welcomed by Japanese authorities as a sign that growth is spilling over to other sectors from the manufacturing sector.

Fourth quarter's Tankan survey results released earlier in the week revealed that sentiment among manufacturers improved for the third straight quarter. Large manufacturers' confidence rose to minus 24 in the December quarter from minus 33 in the previous quarter, the Bank of Japan reported. The index has been on an rising trend since hitting a record low of minus 58 in the March survey.

Sentiment among large non-manufacturers strengthened to minus 22 from September quarter's minus 24, while small manufacturers' sentiment stood at minus 40, better than the minus 52 in the previous quarter.

Earlier this month, the coalition government, led by Prime Minister Yukio Hatoyama, announced a stimulus package worth JPY 7.2 trillion to battle the threats of deflation and a strong yen in the ailing economy. The additional spending would be financed by the second extra budget for the fiscal year ending March.

Japan's tertiary activity index, which is a measure of activity in the nation's services sector, rebounded in October, official data showed on Wednesday. (Market News Provided by RTTNews)