Japan’s Service Sector for December 2024 was revised down to 50.9 from an initial flash reading of 51.4. Despite the adjustment, this figure indicates the second consecutive month of expansion in the service sector, following November’s 50.5. This marks the sector’s strongest growth since September, reflecting a continued rebound in activity.

Demand and Employment Trends

New orders rose for the sixth consecutive month, with the growth rate at its highest since August. Employment in the service sector also continued its upward trajectory for the 15th straight month, although the increase remained modest. The accumulation of outstanding business persisted for the second month, with growth slightly above the long-term average.

Export Sales and Pricing Dynamics

Export sales faced a setback, declining for the third consecutive month. On the pricing front, input cost inflation remained stable, driven by rising raw material and wage costs. To offset these pressures, firms passed on costs to clients, resulting in a sharp but steady increase in prices charged.

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Optimism Amidst Challenges

Despite facing challenges such as declining exports, sentiment in the service sector remained positive. Optimism saw a slight moderation but continued to surpass the average for 2024, indicating resilience among businesses as they navigated the evolving economic landscape.