— Japan Tertiary Index Posts 7th Drop In Past 12 Mths; July +1.6%
— Japan Aug Tertiary Index +2.4% Y/Y Vs July +1.7%
— Japan Tertiary Index Posts 7th Y/Y Rise In Row

TOKYO (MNI) – Japan’s tertiary industry index, which measures
spending in the services sector, fell 0.2% in August from the previous
month, posting the first m/m drop in three months and the seventh in the
past 12 months, the Ministry of Economy, Trade and Industry said on
Monday.

The August decrease, led by declines in automobile maintenance
services and advertising, followed a 1.6% surge in July.

The seasonally adjusted index slipped to 98.7 in August from 98.9
in July, which was the highest level since 100.2 in November 2008,
surpassing the recent high of 98.8 marked in January 2010, when the
index showed a record m/m rise of +2.9%.

The reading of 94.4 marked in March 2009, when the index slumped
3.4% m/m, remains the lowest level on record.

Historical data show that the index hit a record high of 103.5 in
August 2007, when it rose 0.9% from the previous month.

From a year earlier, the unadjusted index rose 2.4% in August to
97.6, marking the seventh straight year-on-year rise after rising 1.7%
in the previous month.

The 2.4% rise in August was the sharpest y/y gain since May 2006,
when the index marked a record year-on-year increase of +3.4%.

The 0.6% rise in February this year was the first y/y increase in
19 months since +0.2% in July 2008.

The index posted a record 7.7% year-on-year drop in March 2009.

In the latest month, the industries that showed slower business
from the previous month were: miscellaneous services including
automobile maintenance (-1.6% m/m), scientific research, professional
and technical services (-0.6%), information and communications (-0.3%),
transport and postal activities (-0.3%), real estate and goods
rental/leasing (-0.2%), accommodations, eating and drinking services
(-0.2%) and compound services (-1.7%).

The industries that showed increased business from the previous
month were: personal and amusement services (+2.4%), utilities (+2.3%),
finance and insurance (+0.5%), wholesale and retail trade (+0.1%),
medical, health care and welfare (+0.1%) and learning support (+0.5%)

The service sector employs more than half of Japan’s workforce, and
spending on services such as retailing, dining and travel is closely
tied to changes in income and consumer confidence.

The METI changed the base year for the index to 2005 from 2000,
effective with the April 2009 data, resulting in revisions to past
figures dating from January 2003.

The ministry also re-grouped some service industries to reflect
changing business patterns. In particular, it divided up Japan Post’s
huge postal and financial services, which are now being privatized, and
reallocating them into “transport and postal activities” and “finance
and insurance.”

As a result, the category called “compound services” no longer
reflects Japan Post’s diversified postal and financial services but has
shrunk to show the limited commission business at post offices.

tokyo@marketnews.com
** Market News International Tokyo Newsroom: 81-3-5403-4833 **

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