TOKYO (Reuters) -Japan’s service sector activity expanded at a slightly faster pace in June, with business confidence improving to a four-month high, a private sector survey showed on Thursday.
The final au Jibun Bank Japan Services purchasing managers’ index (PMI) rose to 51.7 in June from 51.0 in May, topping the flash figure of 51.5 and marking a third consecutive month of growth.
Readings above 50.0 indicate expansion in activity, while those below that level point to a contraction on a monthly basis.
Overall new order growth accelerated slightly from May. But the increase in new export business, generally attributed to tourist activities, decelerated to the slowest since December.
Service firms’ business confidence on a 12-month outlook improved to a four-month high in June, with companies citing expansion plans, staff hiring and new product rollouts, according to the survey. As a result, employment in the sector grew at the fastest pace since January.
Input price inflation eased to a six-month low, but output inflation rose to the fastest rate in 14 months, as service firms continued to pass higher labour, fuel and other costs onto their customers.
The upturn in services, coupled with factory activities’ return to growth for the first time in about a year, helped lift the composite PMI to 51.5 in June from 50.2 in May, marking the strongest overall business activity growth since February.
“However, market confidence and trading conditions remain subdued, in part due to lingering uncertainty over U.S. tariffs,” said Annabel Fiddes, Economics Associate Director at S&P Global Market Intelligence, which compiled the survey.
“The PMI data signalled that overall growth momentum slowed in the second quarter compared to the first quarter of 2025, to suggest an easing of GDP growth,” Fiddes added.
Japan’s GDP shrank by an annualised 0.2% in the January-March quarter due to falling exports and lacklustre domestic consumption even before the full blow of U.S. President Donald Trump’s tariffs hit the economy.
(Reporting by Kantaro Komiya; Editing by Kim Coghill)
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