Japan’s S&P Global Services PMI rose to 53.4 in March 2026, exceeding the flash estimate of 53.0 and market expectations of 52.8, though easing from February’s 21-month high of 53.8. The latest result signaled ongoing expansion in the service sector, with new business rising for a 21st straight month, albeit at a softer pace. Export demand improved, with new orders growing at one of the fastest rates in ten months, though still modest.
Firms continued hiring to expand capacity, but job creation slowed to its weakest since October. Backlogs of work rose slightly, diverging from the long-term trend of declining outstanding business. Input cost inflation accelerated to its strongest in nearly a year, driven by higher raw material, energy, and fuel costs linked to Middle East tensions. Output price growth eased from February but remained elevated. Lastly, business sentiment weakened, falling to its lowest since the pandemic amid rising geopolitical uncertainty.
