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      Japan's Services Sector Growth Slows Amid Intense Price Pressures

      Japan's services sector experienced a slowdown in growth during September, with the S&P Global Japan Services PMI registering at 51.3, down from a five-month high of 52.5 in August. Despite this easing, the index remains above the neutral threshold of 50, indicating continued expansion for the fourth consecutive month. The decline in new orders was attributed to a sharp fall in export business, while domestic demand provided some support. Additionally, disruptions caused by the recent earthquake in Kumamoto impacted activity in certain areas.

      Employment figures showed a positive trend, with service providers increasing their workforce at the fastest rate since February. This rise in hiring coincided with a significant increase in backlogs of work, which grew at the steepest rate in seven months. Business confidence also improved, reaching its highest level since June, suggesting optimism about future growth prospects.

      Despite the overall slowdown, price pressures remain a critical concern. Input cost inflation eased to a six-month low but continued to exert pressure on service providers, who reported rising costs for raw materials, labor, oil, and food. Output prices surged at one of the highest rates recorded in the survey's history. S&P Global indicated that these rapid cost increases, alongside solid growth, could prompt the Bank of Japan to consider another interest rate hike, potentially as early as October.

      © 2026 KLEA News. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

      Source: KLEA News

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