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According to a private survey, Japan's service sector growth reached its highest level in six months in October, thanks to increased demand.
The Nikkei-Markit PMI rose from 50.2 in September to 52.4 in October, the fastest rate of expansion since April. This rise pushed the reading further above the level of 50 points separating contraction expansion.
The survey found that new business growth had grown at its fastest pace in nearly five-and-a-half years, with some evidence suggesting that sales were supported by recovery efforts following September's natural disasters.
Labor shortages have prevented companies from hiring additional staff, and staff numbers have decreased in some cases as retirees have not been replaced.
Joe Hayes, an economist at IHS Markit, said the November PMI would be important in determining whether the October improvements are a response to recent natural disasters. He said:
"As was the case for the October manufacturing PMI data, growth in Japan's crucial service economy picked up at the beginning of the fourth quarter. six months, with companies seeing the best monthly improvement in demand compared to demand since May 2013.
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