(Bloomberg) -- Key gauges of Japan’s manufacturing and service activity improved in April to their highest levels in nearly a year even as the weaker yen intensified price pressure on companies, a sign that they are becoming more tolerant of inflation. 

The au Jibun Bank purchasing managers’ composite index gained to 52.6 in April, the strongest reading since last August, S&P Global reported Tuesday. The PMI readings for manufacturing and services gained respectively to 49.9 and 54.6, for their highest levels since last May. A reading above 50 indicates expansion.

That services continue to drive growth bodes well for the Bank of Japan as it watches out for more evidence that price growth is spreading widely across the economy without pushing activity into sharp decline. The data also suggest that companies are taking in stride the revival of price pressures amplified by the yen’s slide even as they award wage gains to their employees. 

“Higher material, energy and wage costs were key sources of rising average cost burdens, with the weaker yen having played a significant part as well,” Jingyi Pan of S&P Global said. “Firms thereby passed on rising costs to clients, leading to the fastest increase in average charges in a year.”

The BOJ is set to upgrade its price and growth forecasts on Friday at the end of its two-day policy meeting. The central bank is expected to keep policy on hold after raising interest rates last month for the first time since 2007.

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