Japan: Services activity improves in April
The Japan Services Purchasing Managers’ Index (PMI) rose to 54.3 in April from 54.1 in March. As a result, the index moved further above the 50.0 no-change threshold, and signaled a faster improvement in services sector business activity compared to the previous month.
April’s PMI was buoyed by the fastest upturn in business activity across the Japanese service sector since August 2023. Key drivers included strengthening demand conditions and a supportive economic backdrop; total new work increased at the fastest pace since June 2023. Export sales also contributed positively, with a notable boost from inbound tourism, indicating a broad-based improvement in service sector activity.
Prices charged by service providers saw a significant uptick, reaching the steepest increase since the sales tax hike in April 2014. This was largely due to a sharp rise in input costs, particularly higher salary payments and transportation bills, reflecting the fastest rise in overall cost inflation since August 2023. Despite a moderation in business optimism since March, service sector companies remained upbeat about their growth prospects over the next 12 months.