Japan services activity expands for fifth month, PMI shows
EWJ•Japan’s final services PMI rose to 51.7 in October from 51.3 in September, marking a fifth straight month of expansion but below the flash reading of 52.0. New orders grew faster, while business confidence fell to its lowest level since March.
1. Services growth continues
The S&P Global final Japan Services Purchasing Managers’ Index rose to 51.7 in October from 51.3 in September. The reading marked a fifth consecutive month of expansion, but was below the flash estimate of 52.0; 50 separates growth from contraction.
2. Demand and costs
New orders increased for a 28th straight month, with growth picking up as firms cited firmer domestic demand, new clients and business development efforts. Foreign demand remained weak, although the decline in new export orders eased to its slowest since April. Input price inflation fell for a fourth month to an eight-month low, while output price inflation moderated.
3. Confidence and hiring
Business confidence fell to its lowest level since March, with firms citing inflation, an ageing population and labour shortages. Employment rose marginally, its weakest pace in a 14-month hiring stretch. Annabel Fiddes of S&P Global Market Intelligence said persistent inflation “could also constrain demand and hiring in the months ahead,” and that growth and cost pressures would be important considerations for the Bank of Japan as it assesses further policy tightening. Japan’s composite output index slipped to 52.1 from 52.3, its softest growth pace since May.
