Key facts
- The S&P Global final Japan Services PMI rose to 51.7 in October from 51.3 in September, a fifth straight month above 50.
- The October reading came in below the flash estimate of 52.0, S&P Global said.
- New orders grew for a 28th consecutive month, while new export orders fell at the slowest pace since April.
- Input price inflation slowed for a fourth month to an eight-month low, though output charges have risen every month for four and a half years.
- Employment grew at the weakest pace in the current 14-month hiring stretch, S&P Global said.
- The composite output index fell to 52.1 from 52.3, its softest growth since May, as manufacturing output slowed.
Japan's services sector expanded in October for a fifth consecutive month, with the S&P Global final Japan Services Purchasing Managers' Index rising to 51.7 from 51.3 in September, the survey compiler said on November 5. The 50 mark separates growth from contraction. The final reading was below the flash estimate of 52.0.
New orders rose for a 28th straight month and the pace of growth picked up from September, with firms citing firmer domestic demand, new clients and business development efforts. Foreign demand stayed weak, though the decline in new export orders eased to its slowest since April.
Cost pressures eased further. Input price inflation slowed for a fourth straight month to an eight-month low, and output price inflation moderated, although charges have risen every month for the past four and a half years.
Business confidence weakened to its lowest level since March, as concerns over inflation, an ageing population and labor shortages tempered optimism about growth in the defense and technology sectors, business expansion plans and increased tourism. Employment rose only marginally, the weakest pace of job creation in the current 14-month hiring stretch, as resignations and retirements limited headcount growth.
"Persistent inflation could also constrain demand and hiring in the months ahead," said Annabel Fiddes, economics associate director at S&P Global Market Intelligence. "Whether growth loses further momentum and cost pressures ease will be important considerations for the Bank of Japan as it assesses further policy tightening," she added.
The composite output index, which combines services and manufacturing, slipped to 52.1 from 52.3, its softest growth pace since May, as stronger services activity was offset by a slowdown in manufacturing output.