1004 GMT March 31, 2020
The Markit/Nikkei Japan Services Purchasing Managers Index (PMI) rose to 53.0 from 52.2 in April on a seasonally adjusted basis, reported Reuters.
The index remained above the 50 threshold, which separates expansion from contraction, for the eighth consecutive month and reached the highest level since August 2015.
"Following the 0.5 percent GDP expansion during Q1, the PMI data are suggestive of further national output expansion in the second quarter," said Paul Smith, senior economist at IHS Markit, which compiles the index.
The index for new business rose to a four-year high of 53.5 in May from 52.2 in March, while business confidence reached its highest level since mid-2013.
The survey also showed jobs were being created at a more rapid pace, good news for policymakers who hope a tightening labor market will soon translate into higher wages and stronger consumer spending.
Services account for around two-thirds of Japan's GDP, so expansion in the sector would support overall economic growth.