The Digester
finance

Japan services growth slows as Middle East war dents business confidence

Japan's services PMI slipped to 53.4 in March, with confidence hit by the Middle East war and cost pressures intensifying while activity remained in expansion.

Apr 3rd 2026 · Japan

Insights

  • S&P Global Japan Services PMI fell to 53.4 in March from 53.8 in February, remaining in expansion for the 12th month.
  • Business confidence dropped to its lowest level since September 2020 due to uncertainty over the Middle East war.
  • Input prices rose at the fastest pace in nearly a year, while output charge inflation eased from February's near 12-year high.
  • New business expanded at the slowest pace since December, though new export orders accelerated from February.
  • Employment growth slowed to a five-month low as candidate shortages and voluntary departures limited payrolls.
  • Japan's Composite PMI eased to 53.0 in March from 53.9 in February, signalling slower but still robust overall activity.

Sources