The S&P Global final Japan Services Purchasing Managers’ Index (PMI) rose to 53.7 in January from 51.6 in December, marking the 10th straight month of expansion and coming in slightly above the flash estimate of 53.4
Japan’s services sector expanded at its quickest pace in nearly a year in January, lifting overall private-sector activity to its strongest level in 32 months, a closely watched private survey showed on Wednesday, signalling a broadening recovery in the world’s third-largest economy.
The S&P Global final Japan Services Purchasing Managers’ Index (PMI) rose to 53.7 in January from 51.6 in December, marking the 10th straight month of expansion and coming in slightly above the flash estimate of 53.4.
A reading above 50 indicates expansion, while a figure below that level signals contraction.
The upbeat services data helped push the final S&P Global Japan Composite PMI — which combines manufacturing and services — to 53.1 in January from 51.1 in December. That marked the fastest pace of growth in overall private-sector output since May 2023.
“The PMI surveys therefore suggest the recovery has become more broad-based, with demand conditions improving simultaneously across the manufacturing and service sectors,” Annabel Fiddes, economics associate director at S&P Global Market Intelligence, told Reuters.
Demand trends remained firm through the start of the year. Service providers reported the strongest rise in new business in four months, aided by successful marketing campaigns and additional client wins. Overseas demand for Japanese services also improved, with export orders rising at the fastest pace since last April.
Hiring in the services sector continued, though the pace of job creation eased slightly from December. Firms said they expanded payrolls to boost capacity amid rising backlogs of work, indicating sustained pressure on operating resources.
On the price front, cost pressures showed signs of easing. Input prices increased at the slowest rate in nearly two years, offering some relief to businesses grappling with elevated expenses. However, companies continued to pass on higher costs to customers, with selling price inflation accelerating to a seven-month high.
Business sentiment for the year ahead remained positive, underpinned by expectations of further expansion, improved customer footfall and a gradual economic recovery.
Still, risks linger. According to Fiddes, some firms flagged concerns about the global economic outlook, Japan’s ageing population and persistent labour shortages — structural challenges that could temper the pace of expansion in the months ahead.
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