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Japan services PMI rises as selling prices hit record pace
Input costs climbed sharply, and the report said sustained selling price increases could mean official inflation rises further, strengthening the case for another Bank of Japan rate hike.
Japan’s services sector strengthened in August, with the PMI Services measure rising from 51.2 in July to 52.5, extending a third straight month of expansion and marking the strongest growth since March, according to S&P Global data summarized by Action Forex.
New orders accelerated after July’s 25-month low, led mainly by firmer domestic demand, while employment increased only marginally and at the slowest pace in a year. Business confidence improved but remained relatively subdued by recent standards.
Price pressures were the standout development, with services input costs continuing to rise sharply amid Middle East-related disruption and a weak yen, prompting firms to lift output charges at the second-fastest pace since the survey began in 2007.
At the composite level, selling prices rose at the fastest rate on record even as input-cost inflation eased to the lowest since March, and the update said this could signal that official inflation may rise further. Action Forex also cited S&P Global’s view that the combination of stronger growth and price pressures strengthens the case for another Bank of Japan interest rate hike ahead of the September meeting.