Activity in Japan’s service and factory sectors expanded in May, signaling a stronger post-pandemic economic recovery.
The au Jibun Bank’s purchasing managers index of activity in Japan’s service sector rose 0.9 to a record 56.3 and the reading in the manufacturing sector added 1.3 to 50.8, rising above the 50 mark that separates a contraction from an expansion for the first time since October 2022.
The recent comeback of international tourists to Japan has supported the service sector with the government largely ending its pandemic restrictions, and the ease of supply chain snarls has helped manufacturers, according to S&P Global Market Intelligence, which compiles the survey.
The Japanese economy grew at a faster pace than expected in the first quarter of this year following a technical recession at the end of last year.
The robust economic outlook along with rising stocks is keeping speculation simmering that Prime Minister Fumio Kishida may consider an early election. Polls showed a bump in the support rate for his cabinet following the Group of Seven summit in Hiroshima over the weekend.
“It’s a positive environment” for elections, said Taro Saito, head of economic research at NLI Research Institute. “Manufacturing remains stagnant, but when I look at the details, I’m beginning to see some small good signs.”
