Japan Services Activity Expansion Revised Downward

Japan’s S&P Global Services PMI was revised slightly lower to 51.0 in April 2026 from 51.2 in the flash reading and down from March’s final 53.4, signalling a thirteenth successive month of expansion. However, the latest reading remained the lowest figure since May 2025, as new orders grew at the slowest pace since last October, while foreign sales declined for the first time in five months, albeit modestly. Employment increased modestly, while backlogs of work rose at the slowest pace in 14 months. On the price front, input cost inflation accelerated to a 12-month high, mainly due to higher fuel prices. As a result, firms passed the higher costs on to their clients, with selling prices rising at the fastest pace since the survey began in September 2007. Looking ahead, business sentiment improved slightly amid ongoing uncertainty over the Middle East conflict and its impact on costs and customer demand.

Japan’s S&P Global Services PMI slipped to 51.2 in April 2026 from a final 53.4 in the previous month, a preliminary reading showed. It marked the lowest figure since May 2025, pointing to a moderation in service sector growth. New orders continued to rise but at the slowest pace since October 2025, while overseas demand declined for the first time in five months, suggesting softer external conditions. On the price front, input costs for service providers increased further, though the pace of inflation was notably slower than that seen among goods producers, indicating relatively milder cost pressures within the services sector.

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.