Business torrents

Japan’s demand for services rose for a third month in August, signaling that the country’s recovery from its deepest postwar recession is spreading to consumers.

The tertiary index, which captures 63 percent of the economy, advanced 0.3 percent from July, the Trade Ministry said today in Tokyo. The median forecast of 21 economists surveyed by Bloomberg News was for a 0.1 percent increase.

Analysts say the gains may not be sustained because the jobless rate is near a postwar high and lower incomes will compel consumers to cut back. The Bank of Japan last week said private consumption is still weak even as it upgraded its assessment of the economy.

“We’re starting to see a shift from buying goods to buying services, and that means that spending fluctuations are likely to stabilize,” said Noriaki Matsuoka, an economist at Daiwa Asset　Management Co. in Tokyo. “But we still can’t call this a self-sustained recovery.”

Household spending rose 2.6 percent in August from a year earlier. Fewer consumers in September expected to slash spending on services such as sports activities in the next three months compared to when they were surveyed in June, the Cabinet Office said last week.

Sales at Kourakuen Corp., a noodle shop operator, climbed 5.4 percent in August from a year earlier after rising for the first time in eight months in July.

Consumer confidence surged to a 23-month high in September, bolstered by the Democratic Party of Japan-led government’s campaign promises to rekindle consumer demand as well as a pickup in overseas economies. That optimism will be tempered by the deteriorating job market, according to economist Junko Nishioka.

“Eventually, all this hope will start to fade,” said Nishioka, chief economist at RBS Securities Japan Ltd. in Tokyo.

Economists surveyed by Bloomberg News predict the jobless rate will reach an unprecedented 6 percent next year from 5.5 percent in August.

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