TOKYO (Reuters) - Japan's services sector shrank at the fastest pace on record in April as a huge blow to demand from the coronavirus epidemic and subsequent lockdown measures greatly hurt business activity and expectations.
The final seasonally adjusted au Jibun Bank Japan Services Purchasing Managers' Index (PMI) plummeted to a seasonally adjusted 21.5 in April from 33.8 in the previous month.
That marked the lowest reading on record with data going back to September 2007, and was slightly below a preliminary 22.8 released last month.
The world's third-largest economy is widely expected to have fallen into recession - two straight quarters of contraction - in the first quarter as the coronavirus dashed hopes of a domestic led-recovery after last October's nationwide tax hike.
Analysts expect the economy to shrink at an even sharper pace in the current quarter, with many forecasting a rate of decline that could be larger than the 17.8% drop in the first quarter of 2009, during the global financial crisis.
"Japan's economic downturn accelerated in April," said Joe Hayes, economist at IHS Markit, which compiled the survey.
"New orders and output fell at unprecedented rates which outpaced previous sharp declines such as those during the global financial crisis and in aftermath of the 2011 tsunami."
Companies reported sharp falls in sales due to order cancellations and lower tourism, suggesting they are struggling with the virus outbreak amid concern the economic damage would be long-lasting.
The survey showed business expectations fell at their quickest pace since January 2009, with uncertainty over the timing of an economic recovery clouding the outlook.
Prime Minister Shinzo Abe extended on Monday a national state of emergency to May 31, saying the coronavirus infection rate had not dropped enough to end measures aimed at slowing the outbreak.
In recognition of the risks the emergency poses to Japan's economy, however, Abe promised to end restrictions earlier if experts advised him he could do so at a coronavirus task force due to meet on May 14.
The composite PMI, which includes both manufacturing and services, fell to 25.8 in April from the previous month's final 36.2, also marking the lowest on record.