TOKYO, June 5 Reuters Japan39;s service activity extended robust gains in May, a private sector survey showed on Wednesday, amid persistent inflationary pressures that have boosted expectations for another interest rate hike this year.

The final au Jibun Bank Service purchasing managers39; index PMI dipped to 53.8 last month from 54.3 in April.

The index has remained above the 50mark that separates contraction from expansion since September 2022 and was better than the flash reading of 53.6.

The Japanese service sector39;s strong upturn was sustained in May, with growth rates for activity and new work easing only slightly, said Trevor Balchin, economics director at SP Global Market Intelligence.

Although the rate of increase slowed in May, new business kept growing, fuelled partly by tourism and the weak yen, the survey showed.

The volume of new work received from overseas rose at the fastest pace since the new export subindex was launched in September 2014, thanks to the yen39;s depreciation and demand from other Asian economies.

The yen has fallen about 10 since the start of the year.

Meanwhile, the rate of input prices eased slightly in May from last month when it hit eightmonth high, but hovered well above the average. The survey respondents cited rising wages and higher fuel and import cost, facilitated by the weak yen, for inflationary pressure.

Service providers passed increased costs for wages and materials on to customers in May, with the pace of price…