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Japan December services PMI rises to 11-month high

People look at advertisements of restaurants in Tokyo, Japan, October 4, 2016. REUTERS/Toru Hanai

TOKYO (Reuters) - Activity in Japan's services sector expanded in December at the fastest pace in 11 months, a private survey showed on Thursday, in a sign that economic growth could pick up due to gains in consumer spending.

The Markit/Nikkei Japan Services Purchasing Managers Index (PMI) rose to a seasonally adjusted 52.3 in December from 51.8 in November.

The index remained above the 50 threshold that separates expansion from contraction for the third consecutive month, and rose to its highest since January 2016.

New business expanded at the fastest rate since July 2015, Markit said, as surveyed companies opened new stores that reached new customers. December was the fifth straight month in which new business increased.

Services account for around two-thirds of Japan's gross domestic product (GDP), so expansion in that sector could help overall economic growth.

Economists expect Japan's GDP to expand by an annualised 0.6 percent in October-December, according to a Reuters poll of economists taken early last month.

That would be slower than the 1.3 percent annualised growth in July-September, but some economists could raise their forecasts after data in late December showed industrial production picked up pace and retail sales rose

(Reporting by Stanley White; Editing by Richard Borsuk)