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Japan Services PMI Moves To Expansion In July

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The services sector in Japan swung to expansion in July, the latest survey from Markit Economics revealed on Tuesday in its latest performance of service index - which came in with a score of 50.4.

That's up from 49.0 in June.

"Latest data signaled improved business conditions for Japanese services in July, with output returning to growth territory for the first time in four months and new orders growing at a modest pace for the second month running," said Markit economist Amy Brownbill.

Output returned to growth territory for the first time in four months, while new orders grew at a modest pace for the second consecutive month. Consequently, payroll numbers increased from a previous month of decline. Both input and selling prices rose in July, with a hike in purchases and employment costs being the main contributors to inflation.

Japans manufacturing sector saw a subdued performance in July. Output contracted at a fractional pace, while new orders grew for the second month running but only modestly. As a result, the composite index climbed to 50.2 from 50.0 in the previous month.

Higher activity in the Japanese service sector largely emanated from a modest increase in new business. The latest rise in new work extended the current sequence of expansion to two months, with improved market conditions boosting the level of new business placed at service providers.

Input costs and prices charged both rose in the Japanese service sector in July, continuing the longest runs in inflation in the survey history.

Employment at manufacturers increased again in July, as has been the case since August 2013. The rate of increase was slight overall and partly driven by higher workloads.

"Payroll numbers rose from a previous month of decline. Nonetheless, there is still room for improvement as rates of growth were marginal as the impact of the sales tax continues to have a lingering effect on the Japanese economy," Brownbill said.

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