TOKYO (Reuters) - Activity in Japan's services sector rose in August to the highest level in four months due to higher sales and new store openings, a private survey showed on Wednesday, highlighting the strength of domestic demand.
The Markit/Nikkei Japan Services Purchasing Managers Index (PMI) increased to 51.5 on a seasonally adjusted basis from 51.3 in July.
The index has remained above the 50 threshold that separates expansion from contraction for 23 consecutive months.
In August, new business expanded at the fastest pace in four months and companies added workers at the highest rate in 14 months, suggesting the economy remains healthy.
Factory activity also picked up in August, according to earlier Markit/Nikkei survey, but economists warn that trade protectionism is a risk to Japan's export-oriented economy.
"Survey data continues to point to fairly robust conditions for the service sector to continue along its expansionary path nonetheless," said Joe Hayes, economist at IHS Markit, which compiles the survey.
The composite PMI, which includes both manufacturing and services, rose to 52.0 in August from 51.8 the previous month.
Recent data on consumer spending, a big driver of the services sector, has been mixed.
Real wages rose in June at the fastest rate in more than 21 years due to higher summer bonuses, but household spending and retail sales data have disappointed.
There is a good chance consumer spending will continue to grow, but economists worry that trade protectionism could harm sentiment at companies and in households.