Japan services sector expansion beats forecast in September

Japan's private sector growth slowed in September, with expansion supported by the services sector, S&P Global reported Friday.

The S&P Global Japan composite purchasing managers' index fell to 51.3 in September, down from a six-month high of 52.0 in August.

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 53.3 in September from 53.1 in August, with the increase in business activity supported by new work. A reading of 53 was expected according to the consensus forecast cited by FXStreet.

Firms in the services sector expanded their workforce in September, meaning employment grew for the first time in three months.

Whilst input cost inflation eased during the month, it remains high compared with the series average. Respondents said the cost of labour, raw material, and fuel compelled companies in the services sector to raise their selling prices yet again.

"Expectations regarding the outlook for business activity also improved in September," S&P Global commented.

On Wednesday, S&P Global reported that the manufacturing PMI fell to 48.5 in September, down from 49.7 in August, but above the consensus forecast of 48.4.

Annabel Fiddes, economics associate director at S&P Global Market Intelligence, said: "While services companies recorded another month of solid growth, manufacturers reported a steeper decline in output amid weak sales. As a result, the private sector as a whole expanded at the slowest rate since May."

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.