Tokyo, June 21 (BridgeNews) - The index that measures activity in Japan's service industry--which accounts for 60% of Japan's economy--fell 3.6% on the month on a seasonally adjusted basis in April, after it rose a revised 1.0% on the month in March, the Ministry of Economy, Trade and Industry (METI) announced Thursday. METI also said the index for activities by all industries, an indicator of the movement of gross domestic product (GDP), decreased 2.5% on the month in April.
The outlook for both service index and all industry indices by private economists here both averaged a 1.3% fall on the month. The service industry accounts for about 60% of Japan's GDP. The service industry includes: utility, transportation, communication, retail, wholesale, restaurants, finance, real estate and other services. The all-industry index includes the service index and: agriculture, forestry, fisheries, construction, industrial production and mining and public services. The 3.6% fall in the April service industry index was the biggest fall since April 1997, when the index was down 6.0%, the official said. The official admitted that the recent weakening in industrial production has had a negative impact on the service industry, such as transportation services and wholesale of IT-related products. However, he said the sharp drop in April was partly due to a reaction from
March such as:
--Sales for mobile phone services fell 36.6% on the month, reacting from a 22.6% gain in March. The official said the tendency of sales to sharply rise in March and fall in April as a reaction has been growing.
--Sales of household electric tools fell 15.4% on the month in April, in reaction to a sharp 10.6% rise in March caused by last-minute buying ahead of April 1, when a new recycling law was implemented. Recent falls in sales of personal computer also lowered the April sales.
--Sales of computer software to corporations fell 8.3% on the month in April, reacting from a sharp gain in March caused by sales of large size software. At a result, the official said, although the April index fell sharply, "(The 3.6% drop) does not necessarily indicate that the service industry has started worsening," adding that, "We should take into account such reaction from March."
The following are monthly changes in the index for activities of service industry and the index for activities of all industries (%, month-on-month):
Service industry index All-industries index
Aug 2000 0.8 0.5
Sep -0.6 -0.5
Oct -0.1 0.2
Nov 0.5 -0.1
Dec 1.9 1.6
Jan 2001 -1.1 -1.7
Feb 2.0 1.4
Mar 1.0r 0.6r
Apr -3.6 -2.5