Japan Services PMI Revised Lower

Japan’s S&P Global Services PMI Business Activity Index was revised lower to 51.2 in July 2026 from 51.9 in the preliminary estimate and after a final reading of 52.2 in the previous month. It was the second consecutive month of expansion in the services sector, though growth slowed as new business expansion eased to a 25-month low. Employment also increased more slowly amid signs of easing capacity pressures. Meanwhile, backlogs of work increased only fractionally, marking the weakest increase in 17 months. At the same time, foreign demand declined for the fourth straight month, though the pace of decline eased to the weakest since April. On the price front, input cost inflation accelerated to near June's four-year record, while firms raised output charges at the second-fastest pace on record, reflecting continued efforts to pass higher costs on to customers. Looking ahead, business confidence remained positive but was among the lowest levels recorded since the pandemic.

Japan’s S&P Global Services PMI Business Activity Index eased to 51.9 in July 2026 from a final 52.2 in the previous month, flash estimates showed. Despite the slowdown, the reading marked the 16th consecutive month of expansion in the services sector. Growth in new business moderated to a mild pace, while employment increased more slowly and foreign demand declined again. On the price front, input cost inflation eased further, but firms raised output charges at the fastest pace in more than 12 years, reflecting continued efforts to pass higher costs on to customers. Looking ahead, business confidence weakened amid persistent uncertainty surrounding the war in the Middle East, particularly its impact on energy and raw material prices, as well as ongoing supply chain disruptions.

Japan’s S&P Global Services PMI Business Activity Index stood at 52.2 in June 2026, higher than the flash data of 51.8 and 50.0 in the prior month. The latest reading marked the 14th expansion in the past 15 months, although the pace of growth remained modest and slightly below the average over the past year. New business rose at one of the fastest rates in nearly two years, driven by stronger domestic demand, even as export orders fell sharply. Firms expanded hiring, with employment growth accelerating, while backlogs increased at the quickest pace since March, underscoring capacity pressures. Input cost inflation surged to a four-year high on higher oil, energy, food, and labor costs, yet selling price hikes slowed compared with May, hinting at softer pass-through. Finally, business confidence stayed subdued, among the weakest since the pandemic, as companies flagged uncertainty from Middle East tensions, persistent cost burdens, and labor shortages as key risks to the outlook.