— Japan Feb Tertiary Index +0.4% Y/Y Vs Jan Revised -0.5%
— Japan Tertiary Index Posts 1st M/M Drop In 2 Months
— Japan Tertiary Index Posts 1st Y/Y Rise In 19 Months

TOKYO (MNI) – Japan’s tertiary industry index, which measures
spending in the services sector, fell 0.2% in February from the previous
month, posting the first month-on-month drop in two months, the Ministry
of Economy, Trade and Industry said on Tuesday.

The February drop came after a revised 2.5% rise in January (vs.
+2.9% reported earlier) and was the sixth m/m drop in the past 12

The seasonally adjusted index dipped to 98.2 in February from a
revised 98.4 in January, which was the highest level since a revised
98.4 in January 2009 under the current base year (2005 = 100).

The METI made annual revisions to the data.

The revised 2.5% gain in January 2010 was the sharpest m/m rise
under the 2005 base year and the second largest increase on record after
the 5.0% gain marked in March 1989, when the index was pushed up by a
temporary surge in demand before the government’s sale tax hike took
effect the following month.

The reading of 94.4 marked in March 2009 remains the lowest level
on record.

The index slumped by a revised record 3.4% (-2.7% before the
revisions) month on month in March 2009 but rebounded by an unrevised
2.0% in April.

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

From a year earlier, the unadjusted index rose 0.4% in February to
91.3 after falling a revised 0.5% in the previous month (preliminary

The rise in February marked the first year-on-year rise 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 saw slower business from
the previous month were: wholesale and retail trade (-3.1%), finance and
insurance (-1.9%), miscellaneous services including automobile
maintenance (-2.4%), information and communications (-0.9%), personal
and amusement services (-1.3%), real estate and goods rental/leasing
(-0.6%), scientific research, professional and technical services
(-0.3%), learning support (-0.7%) and compound services (-5.2%).

The industries that showed increased business from the previous
month were: transport and postal activities (+0.7%), medical, health
care and welfare (+0.6%), utilities (+0.8%) as well as accommodations,
eating and drinking services (+0.1%).

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 has 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.

** Market News International Tokyo Newsroom: 81-3-5403-4833 **

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