TOKYO, Feb 4 : Japan’s services activity expanded at its quickest pace in nearly a year while the overall private sector posted the fastest growth in 32 months, buoyed by robust demand, a private sector survey showed on Wednesday.

The S&P Global final Japan Services Purchasing Managers’ Index (PMI) rose to 53.7 in January from 51.6 in December, marking the 10th consecutive month of growth and slightly higher than a flash reading of 53.4. Readings above 50.0 indicate growth in activity, while those below point to a contraction.

"The PMI surveys therefore suggest the recovery has become more broad-based, with demand conditions improving simultaneously across the manufacturing and service sectors," said Annabel Fiddes, economics associate director at S&P Global Market Intelligence.

For the services sector, successes in marketing campaigns and additional client wins helped new work in January to log the strongest rise in four months, according to the survey. Foreign demand for Japanese services also grew at the fastest pace since last April.

Employment in the services sector continued to rise, though at a slightly slower pace than in December. Companies attributed the hiring to efforts to expand capacity amid rising backlogs of work.

Cost pressures eased, with input prices rising at their slowest rate in nearly two years. However, selling price inflation accelerated to a seven-month high as firms passed on higher costs to customers.

Business confidence for the next 12 months remained upbeat, supported by anticipation of company expansion, higher customer turnout and economic recovery.

Still, Fiddes said some firms were worried about the global economic outlook, an ageing demographic and labour shortages.

The final S&P Global Japan Composite PMI, which includes both services and manufacturing, rose to 53.1 in January from 51.1 in December. It was the fastest growth in total private sector output since May 2023, with services anchoring growth.