Japan’s PMI Services was finalized at 49.4 in June, a significant drop from May’s 53.8, ending a 21-month growth sequence. PMI Composite was finalized at 49.7, down from May’s 52.6, marking the first contraction in seven months.
Trevor Balchin, Economics Director at S&P Global Market Intelligence, highlighted the service sector’s recent strong upturn “ended abruptly”. He noted that the Business Activity Index dropped by -4.4 points during was the largest decline since January 2022 and among the biggest on record.
Despite the concerning headline figures, Balchin pointed out that the underlying details were “less concerning”. The fall in new business was merely a “pause” rather than an “outright decline” in demand. This pause is partly due to the weak yen boosting international new business. Additionally, the 12 month outlook and job growth remained “relatively strong”.
