NEW DELHI, November 6: Japan’s services sector grew slightly faster in October, but hiring slowed to its weakest pace in 14 months and business confidence slipped, according to the S&P Global Japan Services PMI released on Thursday. The survey said cost pressures eased a little but remained sharp, which it said would matter for the Bank of Japan as it weighs further rate rises.
Key highlights
- Services PMI: 51.7 in October, up from 51.3, the fifth straight month of growth.
- Composite output index: 52.1, down from 52.3, the slowest growth since May, as manufacturing output growth slowed.
- Jobs: services employment rose at the slowest pace in its current 14-month run; across the economy, job creation was the weakest in a year.
- Exports: new export business for service firms fell again, but at the slowest rate in six months.
- Prices: input cost inflation eased to an eight-month low but stayed sharp.
| Index | October 2026 | September 2026 |
|---|---|---|
| Japan Services PMI (business activity) | 51.7 | 51.3 |
| Japan Composite Output Index | 52.1 | 52.3 |
What the survey found
Firms said more new work and efforts to widen their customer base lifted activity. Growth came from home demand, with new export business falling again. Growth stayed slower than the average so far in 2026, and optimism about the year ahead slipped to a three-month low. Annabel Fiddes of S&P Global Market Intelligence said input costs and selling prices rose more slowly but increases “remained historically sharp, suggesting that official consumer price inflation could stay elevated in the months ahead”. She said whether growth loses momentum and cost pressures ease would be important for the Bank of Japan “as it assesses further policy tightening”.
Our calculation
- The services index rose 0.4 points while the composite index fell 0.2 points, meaning a weaker factory sector outweighed services.
- At 51.7, Japan’s services growth is well below India’s (55.8) and above China’s (50.8) for the same month.
What it means
Japan’s economy is still growing, but slowly, while prices remain high. That mix leaves the Bank of Japan balancing the need to bring inflation down against the risk of slowing growth further. Any further rate rise in Japan affects the yen and global investment flows, which matter for Asian markets, including India.
What to watch
- Japan’s official consumer price data for October.
- Signals from the Bank of Japan on its next policy step.
The Shibuya scramble crossing in Tokyo. Image: Benh LIEU SONG (Flickr), CC BY-SA 2.0, via Wikimedia Commons. Photo source · Licence
Sources
The Business Desk covers markets, the economy, companies and personal finance. Stories are checked against at least two credible sources before publication.
