Japan’s services sector stagnated in March, with the Jibun Bank / S&P Global Services PMI falling to 50.0
- matching the neutral level that separates growth from contraction
- from February’s 53.7
- better than the earlier flash estimate of 49.5
The data suggests that momentum from earlier in the year has faded, as companies reported weaker market conditions. While new orders continued to grow, the pace slowed for a second month, hitting its weakest point since November. Export orders still increased, helped by demand from China and Taiwan, though this also moderated.
Despite solid business expectations for the year ahead, confidence dipped to its lowest level since January 2021, reflecting worries about labour shortages, an ageing population, and uncertainty in global trade, especially following President Trump’s tariff announcements.
Costs for businesses are rising too, with input price inflation hitting a 19-month high due to labour, material, and fuel costs, as well as currency effects. However, output prices (what companies charge customers) fell to a five-month low.
The broader picture is also concerning: Japan’s composite PMI, which includes both services and manufacturing, fell to 48.9, signaling the fastest contraction in over two years and the first overall decline since October.
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