Japanese Demand for Services Declined 3% in March, Second Monthly Drop

Japan’s demand for services fell for a second month in March as companies pared spending at wholesalers and on information and communication.

The tertiary index, which captures 63 percent of the economy, declined 3 percent from February, the Trade Ministry said today in Tokyo. The median forecast of 17 economists surveyed by Bloomberg News was for a 1.5 percent drop.

“January’s jump was big, so this is somewhat of a reflex,” Kyohei Morita, chief economist at Barclays Capital in Tokyo, said before the report, referring to a 2.9 percent gain that was the biggest in more than a decade. “As a whole, consumer spending rose in March.”

A separate report today showed consumer confidence climbed to the highest level since 2007 last month, adding to evidence that households are reaping the benefits of an export-fueled rebound. Consumer outlays helped economic growth accelerate last quarter, economists said before a report due May 20.

Information and communication service demand slid 8.4 percent in March from a month earlier, while the wholesale and retail category dropped 4.3 percent, the Trade Ministry said. Meanwhile living-related services climbed 1.2 percent.

Barclays’ Morita says the services sector may benefit later this year from a jobs recovery that has come faster for women than men, as women tend to spend more on services. While the unemployment rate for men rose to 5.6 percent in March, the figure dropped to 4.3 percent for women.

This rebound is “led by women, where control of the family wallet is shifting to the mother,” said Morita.

Japanese workers’ paychecks gained for the first time in 22 months in March, and the number of job openings for every 100 candidates climbed to the highest in a year.

The economy probably expanded at an annual 5.5 percent pace in the three months ended March 31, according to the median estimate of 21 analysts surveyed by Bloomberg News.

To contact the reporter on this story: Keiko Ujikane in Tokyo at kujikane@bloomberg.net; Aki Ito in Tokyo at aito16@bloomberg.net

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