The index stayed above the 50 threshold that separates contraction from expansion for the 30th straight month.
TOKYO: Japanese services sector activity expanded in March at a slightly slower pace than the previous month as growth in new business slowed and business optimism was at an 18-month low.
The Markit/Nikkei Japan Services Purchasing Managers' Index (PMI) fell to a seasonally adjusted 52.0 in March from 52.3 in February.
The index stayed above the 50 threshold that separates contraction from expansion for the 30th straight month.
Joe Hayes, economist at IHS Markit, which compiles the survey, said the PMI data "rounded off a fairly solid start" to the first quarter, with business activity growth at its strongest quarterly average since April-June 2017.
But he added that while trade frictions and a global economy slowdown "pose obvious external risks, the consumption tax hike later this year could potentially derail the domestic market".
The index measuring new business decreased to 53.8 from 54.5 in February, the survey showed. New export business increased again, though just fractionally.
The composite PMI, which includes both manufacturing and services, eased to 50.4 from 50.7 in the previous month, because factory output fell at the fastest pace in nearly three years.
The United States has imposed punitive tariffs on $250 billion worth of imports from China, while Beijing has hit back with tariffs on $110 billion worth of U.S. goods.
This has caused Japan's exports and factory output to fall because the country ships a lot of electronic parts and heavy machinery to manufacturers in China. - Reuters
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