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TOKYO (MNI) – Japan’s tertiary industry index, which measures
spending in the service sector, rose a seasonally adjusted 1.3% on month
in January, posting the first gain in two months on strong retail and
wholesale sales, the median forecast by economists in a Market News
International survey showed.

The Ministry of Economy, Trade and Industry will release the data
at 0850 JST on Thursday, Mar. 17 (2350 GMT Wednesday).

The expected gain in January will follow a preliminary -0.8% m/m in
December and +0.5% in November.

The median forecast showed that the index stood at 99.0 in January
against 100.0 for the 2005 base year, posting the highest level since
100.2 marked in November 2008.

Economists said an improvement in retail and wholesale sales, which
account for about 26% of the tertiary industry index, appears to have
pushed up the index.

Seasonally adjusted combined sales of retailers and wholesalers
rose a robust 5.1% m/m in January, after falling 1.2% in December, data
released by the Ministry of Economy, Trade and Industry showed.

According to the METI, the strong sales were due mainly to
a recovery in sales of automobiles and household electronics.

Its data showed retail sales of motor vehicles rose 9.4% m/m in
January, accelerating from +0.5% in December, and sales of machinery and
equipment such as household electronics rose 3.9% after -40.3% in
December.

Moreover, sales of energy (gasoline,heating oil) appeared to have
been pushed up by freezing temperatures and rising prices of imported
crude oil, METI said.

The average price of regular gasoline stood at Y136 per liter, up
7.9% on year in January, accelerating from +4.7% in December, data
released by the Oil Information Center showed.

Looking ahead, Akiko Kosugi, economist at Dai-Ichi Life Research
Institute, said, “The tertiary industry index is expected to show a weak
movement from now on, assuming that personal consumption remains
sluggish for the time being.”

Akira Maekawa, senior economist at Global Futures and Forex (GFT),
agreed, saying, “It is highly possible that activity of the service
industry will continue seesawing, given waning of government stimulative
measures, sluggish rises in wages and a slow improvement in consumer
sentiment.”

The tertiary industry index hit the record high of 103.5 in August
2007, when Japan’s economy was still in the longest post-war expansion
period. It hit the record low of 94.4 in March 2009 in the aftermath of
the collapse of Lehman Brothers in September 2008.

skodama@marketnews.com
** Market News International Tokyo Newsroom: 81-3-5403-4838 **

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