Japan's services sector activity expanded at a moderate pace in May as growth in new sales accelerated, according to data from Nikkei and IHS Markit.

The seasonally adjusted Nikkei business activity index for the Japanese services sector edged down to 51.7 in May from 51.8 in April. The growth in the second quarter has so far been "fractionally weaker" than the previous quarter, Nikkei and IHS Markit said.

New sales increased and new export business rebounded in May following a drop in April. The rate of job creation slowed while work backlogs increased at a more marginal pace compared with the previous month.

The outlook of service providers dipped slightly but remains optimistic, supported by strong demand from global clients, new stores and increased sales, according to the survey.

The Nikkei composite output index, which takes into account manufacturing and services, ticked down to 50.7 in May from 50.8 a month ago as factory activity contracted during the period.