Japan’s Services PMI Rises to 52.5 in August, a Five-Month High
Japan’s services sector expanded at its fastest pace since March 2026, with the S&P Global Japan Services PMI rising to 52.5 in August from 51.2 in July, S&P Global said in a report released at 00:30 GMT on September 3, 2026.
Composite Index Extends 17th Month of Expansion
The Japan Composite Output Index, which combines the services and manufacturing surveys using weights based on each sector’s share of official GDP, rose to 53.5 in August from 52.7 in July, marking a 17th consecutive month of expansion and the steepest rate of growth in roughly six months, the report said. Both readings came in above their mid-month flash estimates, Reuters reported, meaning the final services figure was revised up by 0.2 point and the final composite figure by 0.1 point once the survey period closed.
| Measure | July | Flash August | Final August |
|---|---|---|---|
| Services PMI | 51.2 | 52.3 | 52.5 |
| Composite PMI | 52.7 | 53.4 | 53.5 |
Selling Prices Reach a Survey Record at the Composite Level
Japanese service providers raised their own prices in August at the second fastest pace since the survey began in late 2007, behind only April 2014, when a national consumption tax increase drove costs higher, the report said. At the composite level, selling prices rose at the steepest rate on record since the series began in late 2007, even as input cost inflation across both sectors eased to a four month low. The composite’s expansion continued to be led by manufacturing, which posted another sharp increase in output, while services growth also improved during the month, the report added.
Domestic Demand Offsets Falling Exports
Composite new business rose at one of its quickest paces in three years, the report said, even as new export business within the services survey contracted for a fifth straight month, its sharpest rate of decline since November 2020, Reuters reported. Panelists surveyed for the report attributed the sector’s overall growth to firmer domestic demand, including a higher volume of public sector project activity and client enquiries. Hiring in the services sector rose for a 12th consecutive month but only marginally, the slowest pace of job creation in a year, as some firms held back from replacing departing staff even while raising activity levels.
Why it matters: For Japan, accelerating services growth alongside a 17th consecutive month of composite expansion signals sustained private sector momentum, though it comes with the steepest rise in selling prices since the survey series began nearly two decades ago. Annabel Fiddes, the survey’s economics associate director, said the trend “indicates that official inflation could rise further in the coming months and, alongside stronger growth, strengthens the case for another Bank of Japan interest rate hike.”
Outlook: The next monthly release, covering September 2026, is due in early October 2026 under this survey’s normal publication schedule.
Sources: S&P Global, Reuters.
