2020.01.0702:01:00UTC+00Japan Service Sector Moves Back Into Contraction

The Japan service sector moved back into contraction at the end of the year, wiping out the minor recovery seen in November, survey data from IHS Markit showed Tuesday.

The Jibun Bank services Purchasing Managers' Index fell to 49.4 in December from 50.3 in November. A score below 50 indicates contraction.

This was the second contraction in services output over the last three months and also the strongest fall in over three years, subsequently rounding off the worst quarterly economic performance since the third quarter of 2016.

In the service sector, new business gains were reported but underlying demand conditions slowed from the first half of the year, leading businesses to reduce their output charges and begin reducing backlogs.

Nonetheless, employment growth was maintained and output expectations remained in firm positive territory.

Further, business sentiment remained positive although the degree of optimism slipped from November's five-month high.

The Jibun Bank composite output index came in at 48.6 in December, down from 49.8 in November, signaling the sharpest contraction in private sector business activity for over five-and-a-half years.