— Japan June Tertiary Index Revised +0.2% M/M Vs Prelim -0.1%
— Japan Tertiary Index Posts 2nd M/M Rise In Row, 6th in 12 Mths
— Japan July Tertiary Index +1.7% Y/Y Vs June Revised +1.0%
— Japan Tertiary Index Posts 6th Y/Y Rise In Row

TOKYO (MNI) – Japan’s tertiary industry index, which measures
spending in the services sector, jumped 1.6% in July from the previous
month, posting the second straight m/m rise and the sixth in the past 12
months, the Ministry of Economy, Trade and Industry said on Thursday.

The July increase, led by better business in wholesale food and
beverages as well as road freight transport, followed a revised 0.2%
gain in June (vs. -0.1% reported earlier).

The seasonally adjusted index surged to 98.9 in July from a revised
97.3 in June. It was the highest level since 100.2 in November 2008,
surpassing the recent high of 98.8 marked in January 2010, when the
index jumped 2.9% m/m.

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

From a year earlier, the unadjusted index rose 1.7% in July to
99.3, marking the sixth straight year-on-year rise after rising a
revised 1.0% in the previous month (preliminary +0.8%).

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 increased business
from the previous month were: wholesale and retail trade (+2.3% m/m),
transport and postal activities (+3.5%), scientific research,
professional and technical services (+4.5%), information and
communications (+1.8%), accommodations, eating and drinking services
(+3.1%), utilities (+1.6%), finance and insurance (+0.6%), learning
support (+0.9%) and compound services (+3.4%).

The industries that showed slower business from the previous month
were: miscellaneous services including automobile maintenance (-2.3%),
personal and amusement services (-0.9%), medical, health care and
welfare (-0.4%) and real estate and goods rental/leasing (-0.3%).

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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