Key facts
- Japan's service sector PMI fell to 51.3 in September from 52.5 in August.
- New orders and business activity growth slowed.
- New export business declined.
- Employment growth accelerated.
- Input cost inflation eased but remained elevated.
- The composite PMI fell to 52.3 from 53.5.
Japan's service sector expanded at a weaker pace in September, as business activity and new orders grew more slowly, according to a survey by S&P Global. The final Services Purchasing Managers' Index (PMI) eased to 51.3 from a five-month high of 52.5 in August, falling short of a flash reading of 51.6. A reading above 50 indicates growth.
New orders increased for the 27th consecutive month, but the pace of growth softened compared to August. S&P Global noted that while domestic demand supported sales, new export business declined at the second-sharpest rate since January 2021. Employment, however, rose for the 13th consecutive month and at the fastest pace since February, as companies sought to expand capacity and fill vacancies. Backlogs of work also saw the strongest increase in seven months.
Input cost inflation eased to a six-month low, though it remained historically elevated due to rising costs for raw materials, oil, food, and labor. Service providers continued to raise charges, but the pace of output price inflation softened from August.
The broader Composite PMI, which combines manufacturing and services, fell to 52.3 in September from 53.5 in August, marking its weakest performance since May. This follows the Bank of Japan's quarterly "tankan" survey, which indicated a record high in confidence for Japanese manufacturers but a souring mood among non-manufacturers, presenting a mixed view of the economy.