Japan business activity expands in July

Japanese business activity expanded in July, supported by growth in the services sector, S&P Global reported Tuesday.

The S&P Global Japan composite purchasing managers' index edged up to 51.6 in July from 51.5 in June.

A reading above the 50.0 neutral mark indicates an overall increase in business activity from the previous month, while a reading below signals a contraction.

Specifically, the services PMI rose to 53.6 in July, up from 51.7 in June.

Meanwhile, S&P Global reported on Friday that the manufacturing PMI fell to 48.9 in July, down from 50.1 in June but above the consensus forecast of 48.8.

Annabel Fiddes, economics associate director at S&P Global Market Intelligence, said: "PMI data showed a further modest increase in Japanese private sector output at the start of the third quarter. However, this reflected a steep increase in business activity at service providers, as factory output fell back into contraction.

"More forward-looking indicators were a little less upbeat in July. Firstly, overall new business continued to increase only slightly, while there was a reduction in overseas sales at both manufacturers and service providers. At the same time, business confidence regarding the outlook for output slipped to a three-month low."

S&P Global compiles the PMI figures each month using survey responses from a panel of around 400 service sector companies and 400 manufacturers. The composite figure is a weighted average of the services and manufacturing indices.