Japan: Services PMI rises sharply in July
The Japan Services Purchasing Managers’ Index (PMI) rose to 53.7 in July from 49.4 in June. As a result, the index moved above the 50.0 no-change threshold, and signaled an improvement in services-sector business activity compared to the previous month.
The uplift in the Services PMI was primarily driven by rebounds in total activity and new business, attributed to improved customer numbers and demand conditions. This positive momentum led to a further increase in employment. However, foreign demand for Japanese services contracted for the first time in 2024, and marked the most significant rate of contraction since June 2022.
Inflationary pressures in the service sector remained marked at the start of the third quarter, with operating expenses rising for the forty-fourth consecutive month due to increases in fuel, labor, and logistics costs. Firms responded by raising their selling prices, with the rate of charge inflation strengthening since June. Finally, business confidence remained strong, buoyed by optimism over new store openings and client wins.