Japan’s PMI Services was finalized at 54.1 in March, a notable improvement from February’s 52.9 and marking the most significant growth for the past seven months. PMI Composite also rose to 51.7 from the previous month’s 50.6.
Usamah Bhatti, economist at S&P Global Market Intelligence, noted that near-term outlook for the service sector appears “robust”, as outstanding business, a key indicator of future work, continues to rise at “near-record rates”. Confidence regarding the 12-month future also remains strong among service providers.
However, the sector is not without its challenges, particularly on the price front. Businesses signaled “another marked increase in cost burdens,” underlining ongoing inflationary pressures. These pressures are mirrored in the broader Japanese private sector, where cost inflation has hit a “five-month high”.
Bhatti added that inflationary pressures, alongside BoJ’s recent shift away from negative interest rates, “will likely remain a downside risk to the Japanese private sector economy in the coming months.”
