Japan: Services PMI in March shows strong growth and optimism
The au Jibun Japan Services Purchasing Managers’ Index (PMI) rose to 54.1 in March from 52.9 in February. As a result, the index moved further above the 50.0 no-change threshold, and signaled a faster improvement in services sector operating conditions compared to the previous month.
The key drivers behind the latest PMI reading were solid gains in total activity and new business, which reached their strongest levels since last August. This was attributed to improved customer numbers and confidence, leading to further solid increases in outstanding business and employment. The uptick in activity and new business volumes was also bolstered by stronger inbound tourism.
On the pricing and business sentiment front, inflationary pressures intensified at the end of the first quarter, with operating expenses reaching a five-month high. This was due to increased costs across a broad range of inputs, including fuel, labor, and utilities. Despite these pressures, firms attempted to pass higher costs onto clients, resulting in a modest increase in selling prices. Meanwhile, business confidence within the Japanese service sector remained robust, driven by hopes for a broad-based economic upswing, new client acquisition, store openings, and stronger customer numbers.