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Japan services activity expands for fifth month, PMI shows
Japan’s services sector expanded for a fifth consecutive month in October, with activity and new orders growing slightly faster than in September. The modest improvement indicates continued growth, but weaker business confidence and slowing manufacturing point to a loss of momentum across the wider economy.
The final S&P Global services PMI rose to 51.7 from 51.3, below the earlier estimate of 52.0; readings above 50 indicate expansion. New orders increased for a 28th month, while foreign demand remained weak and employment growth was marginal, its slowest in a 14-month hiring period. Input price inflation eased to an eight-month low, but firms cited inflation, an ageing population and labour shortages as concerns; the composite output index fell to 52.1, its weakest growth since May.
In short
- Japan’s services sector grew for a fifth month.
- The final PMI was 51.7, below the flash estimate.
- Confidence and hiring growth weakened amid persistent concerns.
Explained simply
Japan’s services sector includes businesses such as shops, hotels and transport firms. The purchasing managers’ index, or PMI, is based on companies’ reports of activity, orders, jobs and costs; a reading above 50 indicates growth.
Services are a large part of Japan’s economy, alongside manufacturing. Changes in orders, hiring and prices can help show whether demand is strengthening and what pressures businesses face, while Japan’s ageing population and labour shortages affect their ability to find workers.