Japan's service activity perks up as demand improves, PMI shows

TOKYO, Dec 4 (Reuters) - Japan's service activity swung back to growth in November as improving demand supported new business, a private sector survey showed on Wednesday.

The final au Jibun Bank Service purchasing managers' index (PMI) rose to 50.5 in November from 49.7 in October, according to the survey compiled by the S&P Global Market Intelligence.

It was slightly higher than a flash reading of 50.2 and rose above the 50.0 threshold separating expansion from contraction.

"The Japanese services economy experienced a renewed upswing in growth in the penultimate month of the year," as an improvement in demand helped output and new business, said Usamah Bhatti, economist at S&P Global Market Intelligence.

New business expanded for the fifth straight month in November, reflecting improved confidence and business expansions, the survey found.

Firms were optimistic about their business outlook with the index of the future activity rising to the highest since July.

They see new business expansion plans and client wins increasing demand and customers, the survey showed.

Employment rose at the fastest pace in four months while outstanding business hit the strongest growth in eight months, the survey found.

Inflationary pressures remained strong in November due to higher costs of fuel, labour and logistics. Companies passed price burdens on to clients, with the level of prices charged rising at the fastest pace in six months.

Firms expect that "downside risks from inflation and global uncertainty would dissipate and provide a welcome boost to the currently subdued private sector," Bhatti said.

The composite PMI, which combines manufacturing and service activity, grew to 50.1 in November from 49.6 in October.

The PMIs come ahead of the Bank of Japan's policy meeting on Dec. 18-19, with market players closely monitoring economic data.

BOJ Governor Kazuo Ueda told the Nikkei newspaper on Saturday the timing of the next interest rate hike was "approaching" as economic indicators moved in line with central bank forecasts.

(Reporting by Kaori Kaneko; Editing by Sam Holmes)