Japan’s service activity picks up in June on higher prices and expansion plans

Japan’s service sector activity expanded at a higher pace in June compared to the previous month, with the PMI rising to 51.7 points from 51.0 in May. Accelerating domestic new orders helped boost the activity, yet tourism-related new business from overseas decelerated to the slowest since December.

Business confidence surged to a four-month high, allowing many firms to proceed with expansion plans, hiring, and new product rollouts. At the same time, companies continued to raise service prices due to higher fuel, labor, and other costs. 

The country's overall economic expansion also received a boost from factory activity returning to growth for the first time in almost a year. The composite PMI climbed to 51.5. However, according to S&P Global Market Intelligence, market confidence remains subdued as uncertainty over possible US tariffs persists. Japan’s GDP growth is projected to have slowed in the second quarter from the previous one.