On Tuesday, S&P Global's preliminary survey results revealed that Japan's private sector expanded at its quickest rate in nearly a year during April, fuelled by an increase in services activity.
The Au Jibun Bank's flash composite output index indicated an increase to 52.6 in April, up from 51.7 in March. Traditionally, any value over 50.0 denotes industrial expansion.
The main driving force behind this growth continues to be the service sector, with the deterioration in manufacturing output slowly improving. The Purchasing Managers' Index for services increased to 54.6 in April, up from March's 54.1.
The manufacturing PMI indicated a near stabilization of conditions in the manufacturing business with a score of 49.9 in April, up from the 48.2 in March.
Economics Associate Director at S&P Global Market Intelligence, Jingyi Pan, suggests the expansion will continue in the near future based on the current forward looking indicators. The survey indicated a steady increase in new orders, leading to a maintained backlog of work.
The general business outlook stays positive, with firms increasing employment. An increase in price pressures is becoming evident with costs for materials, energy and wages increasing at a faster rate. Accordingly, firms have started to pass on these rising costs to their clients.
