TOKYO, Jan 5 Reuters Japan39;s December service activity expanded at a faster pace from the previous month thanks to strong demand and a lift in confidence even though the overall growth rate was modest, a business survey showed on Friday.

The service sector has been a bright spot for the world39;s thirdlargest economy, marking 16 consecutive months of growth and helping offset some of the drag on momentum from the struggles facing manufacturers.

The final au Jibun Bank Service purchasing managers39; index PMI climbed to 51.5 in December from 50.8 in November when it posted the slowest growth in 2023, according to index publisher SP Global Intelligence.

It was below the flash reading of 52.0 but remained above the 50.0 threshold separating expansion from contraction. Overall, the headline figure was the second softest for last year compared to those in early and mid2023.

An upturn in new business volumes, led by domestic customers, anchored the growth, the survey said.

Firms were also confident that this would lead to continued rises in activity, as indicated by a brighter degree of confidence in the 12month outlook, which was supported by hopes of economic recovery and longterm business expansions, said Usamah Bhatti, economist at SP Global Market Intelligence.

Optimism in December rose to a fourmonth high, while business expansions and vacancies being filled led to employment growth for three straight months, according to the survey.

New export business…