ANKARA

Japan's purchasing managers' index (PMI) in services sector hit 47.8 in September, its highest since June, according to data released on Tuesday.

Despite going up from 42.9 in August, the index below threshold level of 50 signaled a sustained but significantly softer contraction in services sector activity, showed data from the au Jibun Bank Japan Services PMI compiled by London-based global data firm IHS Markit.

Business conditions in services sector continued to be disrupted by the rise in COVID-19 cases and subsequent restrictions during September, it observed.

New business declined slowly, the survey highlighted, adding: "The reduction extended the current sequence to 20 months, though the rate of decline was only modest."

International demand weakened at a softer pace than total new business which drives orders to decrease.

On the positive side, employment levels rose for the second month in a row, with the rate of growth quickening to a five-month high.

"Optimism towards growth prospects was retained, with the level of positive sentiment accelerating to the highest since June," it said.

Average cost burdens on Japanese services companies climbed for the 10th consecutive month in September due to higher raw materials, staff and fuel costs, it mentioned.

The services PMI survey covers transport and communication, financial intermediation, business services, personal services, computing and IT, and hotels and restaurants.