— Japan April Tertiary Index Revised +2.4% M/M Vs Prelim +2.1%
— Japan May Tertiary Index +1.1% Y/Y Vs Apr Revised +1.8%
— Japan Tertiary Index Posts 4th Y/Y Rise In Row

TOKYO (MNI) – Japan’s tertiary industry index, which measures
spending in the services sector, fell 0.9% in May from the previous
month, posting the sixth month-on-month drop in the past 12 months, the
Ministry of Economy, Trade and Industry said on Friday.

The May drop, led by a slowdown in utilities, automobile
maintenance, hotels and restaurants, among many others, came after a
revised 2.4% rise in April (vs. +2.1% reported earlier).

The seasonally adjusted index fell to 97.1 in May from a revised
98.0 in April. In January, the index jumped 2.9% m/m to 98.8, which was
the highest level since 100.2 in November 2008.

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 reading of
103.5 in August 2007, when it rose 0.9% from the previous month.

From a year earlier, the unadjusted index rose 1.1% in May to 94.1,
marking the fourth straight year-on-year rise after rising a revised
1.8% in the previous month (preliminary +1.4%). The 1.8% rise in both
April and March was the largest y/y gain since +1.9% in February 2008.

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 decreased business
from the previous month were: utilities (-2.2%), miscellaneous services
including automobile maintenance (-2.1%), accommodations, eating and
drinking services (-1.6%), learning support (-1.4%), personal and
amusement services (-1.1%), wholesale and retail trade (-0.9%), real
estate and goods rental/leasing (-0.7%), medical, health care and
welfare (-0.5%) and finance and insurance (-0.3%).

The industries that showed increased business from the previous
month were: compound (some postal) services (+2.1%), information and
communications (+1.9%), transport and postal services (+1.0%) and
scientific research, professional and technical 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.

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

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