Nationwide demand for services rose unexpectedly in June as government stimulus measures spurred consumer spending, another sign that the economy is emerging from the recession.
The tertiary index, which gauges 63 percent of the economy, climbed 0.1 percent from May, when it slid a revised 0.3 percent, the trade ministry said Friday. The median estimate was for a 0.3 percent drop.
Prime Minister Taro Aso's ¥25 trillion stimulus has helped counter Japan's deepest postwar recession by providing people with cash handouts and incentives to buy energy-efficient cars and electronics. Worsening job prospects and falling wages make it unlikely consumers will lead a recovery once the government spending runs out.
"The improvement in consumer spending was largely bolstered by the government's stimulus measures," said Yoshiki Shinke, a senior economist at Dai-ichi Life Research Institute in Tokyo. "It's unclear whether consumers will continue spending after the measures are withdrawn."
Business at service providers is growing. Fast Retailing Co. reported sales at its Uniqlo stores rose 6.4 percent in June. Softbank Corp., Japan's third-largest mobile phone firm, said profit rose 41 percent last quarter amid subscriber growth.