Japan Services Growth at 5-Month High

Japan’s S&P Global Services PMI Business Activity Index rose to 52.3 in August 2026 from a final 51.2 in the previous month, a preliminary estimate showed. The latest reading marked the third consecutive month of expansion in the services sector and the fastest pace since March, supported by a stronger increase in new business, which grew at the second-fastest rate since February. However, international demand weakened, with service providers reporting a steeper and marked decline in new export business. Employment growth also moderated, with payrolls rising only marginally at the softest pace in the past year. Meanwhile, services firms remained less optimistic than manufacturers, amid elevated cost pressures and concerns over the economic impact of the ongoing Middle East conflict.

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.