Japan Services Sentiment Falls to 3-Month Low

Japan’s services sector index rose to 48.9 in February 2026 from 47.6 in the previous month, exceeding market expectations of 48.2 and marking the highest reading since December 2024. The improvement reflected firmer household trends in services and several other sectors, suggesting a gradual pickup in domestic demand. The corporate trend index also increased, mainly supported by gains in the manufacturing sector, while employment conditions continued to improve. Separately, the economic outlook index was little changed (50.0 vs 50.1 in February), highlighting cautious optimism that Japan’s economic recovery will continue, even as businesses and households remain mindful of lingering cost pressures.

Japan’s service sector index edged down to 47.6 in January 2026 from a downwardly revised 47.7 in the previous month, falling short of market expectations of 49.1 and marking the lowest reading since August. Household sentiment in the service sector weakened, even as conditions in the retail segment showed some improvement. Meanwhile, the corporate trend index rose, mainly supported by gains in the non-manufacturing sector, although employment conditions deteriorated. Separately, the economic outlook index climbed to 50.1 from a downwardly revised 45.5 in December, signaling expectations of an economic recovery despite lingering concerns over the impact of rising prices.

Japan’s service sector index edged down to 48.6 in December 2025 from 48.7 a month earlier, missing market expectations of 48.8 and marking the lowest reading since September. Household trends weakened in retail despite firmer food and beverage output. Meanwhile, the corporate trend index also slipped, dragged by softer non-manufacturing activity, though employment showed improvement. In contrast, the economic outlook index rose to 50.5 from November’s 50.3, signaling cautious optimism for recovery even as cost pressures persist.