Japan Services Growth Slows

Flash Japan’s S&P Global Services PMI Business Activity Index fell to 51.6 in September 2026 from a final 52.5 in August, which had marked the highest reading since March. New orders continued to rise but more slowly, while overseas demand fell further. Meanwhile, employment growth accelerated, supporting another rise in private-sector employment.

Japan’s S&P Global Services PMI Business Activity Index rose to 52.5 in August 2026 from the flash reading of 52.3 and July’s 51.2. This marked the strongest pace since March, as new orders rose at a faster pace after hitting a 25-month low in July, with growth slightly above the 2026 average, supported mainly by firmer domestic demand. In contrast, export demand continued to decline. Job creation slowed to its weakest pace in a year and remained marginal. Outstanding business increased only slightly, with the rate of accumulation little changed from July’s 17-month low. Meanwhile, input costs continued to rise substantially, although the pace eased slightly amid persistent cost pressures. Selling-price inflation reached its second-fastest pace since the survey began in late 2007, surpassed only in April 2014 following a national consumption-tax hike. Confidence improved modestly, lifted by planned expansion, AI-related efficiency gains and expectations of stronger customer numbers.

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.