Japan’s Service Sector Sustains Growth Momentum in November

Japan’s services sector continued to expand steadily in November, supported by stronger domestic demand and rising business confidence, according to the latest S&P Global Services PMI report. The final Services Purchasing Managers’ Index edged up to 53.2 from October’s 53.1, remaining above the 50.0 threshold that signals growth for the eighth straight month. The data highlights the resilience of Japan’s service-driven economy despite ongoing challenges in external markets.

A faster rise in new orders played a key role in driving overall activity, even as export sales declined for the fifth consecutive month. Domestic demand continued to outperform, helping service providers maintain momentum. Employment also strengthened notably, with hiring activity accelerating at its fastest pace since January. Survey respondents expressed the highest level of business optimism seen this year, reflecting expectations of a more supportive economic environment.

However, cost pressures persisted. Input prices increased at the sharpest rate in six months due to higher expenses for staff, energy, and construction materials. Despite these rising costs, output price inflation eased slightly from October, suggesting firms may be cautious about passing on higher expenses to customers.

Japan’s broader economic performance showed similar improvement. The Composite PMI, which measures combined manufacturing and services activity, rose to 52.0 in November from 51.5, signaling eight consecutive months of expansion. According to S&P Global Market Intelligence, robust service-sector growth helped offset a marginal decline in factory output.

The outlook may further brighten following the approval of a substantial 21.3 trillion yen ($137 billion) stimulus package by Prime Minister Sanae Takaichi’s new government. The measures aim to support economic growth and ease the impact of rising costs after Japan’s GDP contracted in the July–September quarter. Analysts will be watching closely to see whether the stimulus boosts demand and output in the coming months.