Japan Services Growth Revised Downward

Japan’s S&P Global Services PMI Business Activity Index rose to 51.7 in October 2026 from 51.3 in September, but fell short of the flash estimate of 52.0, indicating a modest expansion in activity. New orders increased at a slightly faster pace, while overseas sales declined at their slowest rate in six months. Employment continued to grow, though marginally, marking the weakest pace in the 14-month job-creation streak. Meanwhile, capacity pressures persisted, as unfinished business increased further. On the price front, both input costs and output charges rose at slower rates, pointing to some easing in inflationary pressures, although inflation remained well above historical trends. Looking ahead, business confidence fell to its lowest level since March, as concerns over inflation, an ageing population, and persistent labor shortages weighed on the outlook.

Japan’s S&P Global Services PMI Business Activity Index rose to 52.0 in October 2026 from a final reading of 51.3 in the previous month, according to flash estimates. Sales growth accelerated, although it remained modest, while foreign demand continued to expand. However, employment declined for the first time since August 2025.

Japan’s S&P Global Services PMI Business Activity Index stood at 51.3 in September 2026, down from a flash reading of 51.6 and August's 52.5. The latest result was below the average in 2026 so far, as new orders rose at a softer pace, partly reflecting disruptions from the Kumamoto earthquake, while export orders continued to fall sharply. Employment growth accelerated to its fastest since February, helped by rising customer demand and efforts to expand capacity. However, backlogs of work increased at the fastest rate in seven months, pointing to mounting capacity pressures. Input costs continued to rise sharply, although the pace of inflation eased to a six-month low, with higher raw material, labor, oil and food costs cited. Firms raised selling prices at one of the sharpest rates on record. Meanwhile, business confidence improved to its highest level since June, supported by expectations of stronger demand, new products, diversification and capacity investment.