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Japan's service sector shrinks for 13th month as emergency weighs - PMI

·1 min read

TOKYO, March 3 (Reuters) - Japan's services sector extended declines in February for a 13th straight month, as business activity was hit by curbs put in place to stop the spread of the coronavirus pandemic, leading to weak demand.

The contraction hitting the services sector comes as a state of emergency for Tokyo and three surrounding prefectures put in place in part to take pressure off the nation's medical system is set to end on Sunday.

The final au Jibun Bank Japan Services Purchasing Managers' Index (PMI) came in at a seasonally adjusted 46.3, staying below the 50 level that separates contraction from expansion for the 13th month.

The survey result, which compared to the prior month's 46.1 and a preliminary 45.8 reading, was largely the result of a faster decline in new business and a continuing contraction in export business.

That showed demand remained in a fragile condition as the impact of the pandemic dragged on, said Usamah Bhatti, economist at IHS Markit, which compiles the survey.

"Nevertheless, short-term uncertainty appears to be easing as vaccine rollouts begin," Bhatti said.

"Firms looked to prepare for a boost in demand by expanding employment levels for the first time since last February."

Optimism was also seen in the outlook component of the survey, which showed businesses grew the most positive about the 12 months ahead since January 2018.

The composite PMI, which is calculated using both manufacturing and services, was 48.2 in February from the prior month's final reading of 47.1, also staying in contraction for a 13th month.

(Reporting by Daniel Leussink; Editing by Sam Holmes)