Japan Champagne Bar
A bartender serves a flute of champagne at Goss, a champagne bar located in Tokyo's Ginza shopping district. Reuters

Japan's service sector sentiment improved further in July, according to a survey.

The government-compiled service sector sentiment index rose to 51.3 in July, up for the third consecutive month, a Cabinet Office survey showed on 8 August.

The poll of workers such as taxi drivers, hotel workers and restaurant staff – referred to as "economy watchers" for their proximity to consumer and retail trends -- showed their confidence about current economic conditions rose from 47.7 in June.

However, the outlook index, indicating the level of confidence in future conditions, dropped to 51.5 from 53.3 in June.

Capital economics said in a note to clients: "[8 August's] Economy Watchers Survey showed that conditions continued to improve in July. Unfortunately, it also suggests that the recovery is unlikely to accelerate much further in coming months."

Manufacturing Sector

Japanese manufacturing activity expanded at a slower pace in July when compared to June, according to the results of a private survey.

The Markit and JMMA flash Japan Manufacturing Purchasing Managers Index (PMI) dropped to a seasonally adjusted 50.8 in July from a final reading of 51.5 in June.

GDP Growth

The world's third-largest economy logged its fastest pace of growth in more than two years in the first-quarter of 2014, buoyed by robust consumer spending and strong business investment.

Gross domestic product in Japan rose at an annualised rate of 5.9% in the January-March first-quarter, government data showed on 15 May, as consumers and businesses rushed to make purchases before the national sales tax increased to 8% from 5%.