Intra-Day Market Moving News and Views USD/JPY
|Intra-Day Market Moving News and Views
05 Sep 2016 01:03GMT
USD/JPY - Reuters just reported activity in Japan's services sector slipped back into contraction in August as demand remained subdued despite a slight pick-up in new business, a private survey showed on Monday, highlighting the fragility of the economy.
The IHS Market Japan Services Purchasing Managers Index (PMI) dipped to 49.6 in August from 50.4 in July on a seasonally adjusted basis, below the 50 mark that separates expansion from contraction on a monthly basis.
While the decline was marginal, the reading was below the historical average and reflected a sector that was struggling for traction. The index has been darting between modest expansion and contraction since March.
The index for new business rose for the first time in three months to 50.7 from 49.7 in July, marking the sharpest increase since February.
But activity remained sluggish, prompting services firms to cut staffing for the third month in a row, albeit at a more modest pace than in July.
The services sector accounted for 70 percent of Japan's gross domestic product in 2014.
Sustained weakness would put more pressure on Prime Minister Shinzo Abe and the Bank of Japan, which have struggled to boost the economy and beat nearly two decades of deflationationary trends despite over three years of aggressive monetary policy and fiscal spending.
The composite Japan index for output in both manufacturing and services dipped into contraction, with a reading of 49.8 compared with 50.1 in July. Manufacturing had a 18.7 percent share of the GDP in 2014.
Japan's government is set to roll out economic stimulus featuring 13.5 trillion yen ($131 billion) in fiscal measures for public works and other spending to spur growth, though the spending will be spread over several years.
A majority of economists also expect the Bank of Japan will ease policy further later this month, a Reuters poll found, despite growing concerns in markets that its massive stimulus programme may be starting to do more harm than good.
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