Japan Services PMI Revised Upward

Japan’s S&P Global Services PMI rose to 53.4 in March 2026, exceeding the flash estimate of 53.0 and market expectations of 52.8, though easing from February’s 21-month high of 53.8. The latest result signaled ongoing expansion in the service sector, with new business rising for a 21st straight month, albeit at a softer pace. Export demand improved, with new orders growing at one of the fastest rates in ten months, though still modest. Firms continued hiring to expand capacity, but job creation slowed to its weakest since October. Backlogs of work rose slightly, diverging from the long-term trend of declining outstanding business. Input cost inflation accelerated to its strongest in nearly a year, driven by higher raw material, energy, and fuel costs linked to Middle East tensions. Output price growth eased from February but remained elevated. Lastly, business sentiment weakened, falling to its lowest since the pandemic amid rising geopolitical uncertainty.

Japan’s S&P Global Services PMI fell to 52.8 in March 2026 from a final 53.8 in the previous month, according to preliminary data. The latest reading marked the weakest since December, partly reflecting concerns over the ongoing conflict in the Middle East. New orders expanded at the slowest pace since October, with foreign demand rising only marginally despite a slight improvement. Employment growth also eased during the month. On the price front, input cost inflation accelerated, while output charges increased at a softer pace. Meanwhile, business confidence weakened, weighed by heightened geopolitical risks and uncertainty.

Japan’s S&P Global Services PMI rose to 53.8 in February 2026, confirming preliminary estimates, and up slightly from January’s 53.7, marking the fastest pace since May 2024. Growth was supported by a solid rise in new orders, the most pronounced since April 2024, driven mainly by stronger domestic demand and new client wins. Backlogs of work accumulated at a solid pace, the fastest since June 2023, as firms contended with rising workloads. Employment growth slowed to a three-month low due to labor shortages and staff turnover, although it remained above the survey’s long-run average. Input costs rose sharply, climbing at a historically fast rate, while selling prices increased at the quickest pace since April 2014 as companies passed on higher costs to customers. Business confidence strengthened, with firms expressing optimism for continued growth over the next 12 months, supported by improving demand and investment in new capacity.