Japan's service sector continued to improve in May, albeit at a slower pace than April as the Nikkei Japan Services Purchasing Managers Index, or PMI, slowed to a seasonally adjusted 51.0 from 52.5 in April, data from IHS Markit and Nikkei showed.
The Nikkei Composite Output Index fell to 51.7 in May from 53.1 in April.
Firms continued to expand workforce numbers, which led backlogs of work cleared to the quickest extent in 22 months, but the growth rate of inflows of new work was the weakest since September 2016.
Meanwhile, incomplete work in the manufacturing sector rose in May amid the slowest pace of job creation in seven months. The rate of employment slowed to a three-month low.
Business confidence strengthened, but new sales increased at the "softest rate in 20 months." Output price inflation eased despite a quicker rise in costs.
Slower new order growth and a bigger workforce led to the first reduction in outstanding business since the end of 2017, the report said.
Businesses remained confident about future output prospects in May on the back of planned new product launches and positive demand projections.
