TOKYO, Reuters – Japan’s service sector activity grew at a slower rate in December due to a softening of growth in existing and new business and lower expectations for the next 12 months.

As it recovers from the effects of the pandemic, COVID-19 has fallen and the third-largest global economy should rebound during the fourth quarter.

The seasonally adjusted final au Jibun Bank Japan Services Purchasing Managers’ Index dropped to 52.1, from the preceding month’s 53.0. It was the highest reading since September 2019.

Comparing the figure to a Flash reading of 51.1

According to Usamah Bhatti (economist at IHS Markit), the Japanese service sector companies showed a steady expansion of business conditions at 2021″, said Usamah Bhatti.

“The COVID-19 restrictions were lifted, which allowed customers-facing businesses to continue operating more easily in the fourth quarter.”

However, companies reported shortages of raw materials and labour, which led to employment levels falling to a 15 month low. Business optimism, however, improved at the weakest rate since September.

Bhatti stated that the private sector saw its cost burdens rise at year’s end due to material shortages and delays in supply chains.

“Concerns of disruption will extend into the New Year were elevated,” he said.

From November’s 53.3 final, the composite PMI which includes both manufacturing and service calculations, fell to 52.5.