Japan’s services sector expanded for a fifth consecutive month in October, with a closely watched business-activity index rising slightly as domestic demand improved.

The final au Jibun Bank Japan Services Purchasing Managers’ Index increased to 51.7 from 51.3 in September, according to survey data compiled by S&P Global. A reading above 50 indicates expansion, while a reading below 50 signals contraction.

The final figure was lower than the preliminary estimate of 52.0 released in October. Reuters reported that new orders increased for a 28th straight month, supported by domestic demand, new clients and business-development activity.

Foreign demand remained weaker. New export orders continued to decline, although the rate of contraction was the slowest since April.

Price pressures eased. Input-cost inflation slowed for a fourth consecutive month to an eight-month low, while the pace at which service providers raised their own prices also moderated. Companies have nevertheless increased selling prices every month for roughly four and a half years.

Hiring rose only marginally, marking the weakest employment growth in the current 14-month expansion. Survey respondents cited business-growth plans as a reason for adding staff, while resignations and retirements limited overall headcount gains.

Business confidence fell to its lowest level since March. Companies cited inflation, labor shortages and Japan’s aging population as concerns, even as some expected stronger activity tied to technology, defense and tourism.

The broader composite output index, which combines manufacturing and services, slipped to 52.1 from 52.3. Faster services growth was offset by slower manufacturing output.

The data matter for global markets because the Bank of Japan is weighing the pace of further monetary tightening. Moderating cost pressures could reduce urgency for additional rate increases, while continued expansion and persistent selling-price gains could support a more cautious tightening path.

Sources: - Reuters: https://www.reuters.com/world/asia-pacific/japan-services-activity-expands-fifth-month-pmi-shows-2026-11-05/ - S&P Global Japan October flash PMI context: https://www.spglobal.com/market-intelligence/en/news-insights/research/2026/10/japans-october-flash-pmi-points-to-sustained-solid-growth-and-rising-cost-pressures - RTTNews final PMI report: https://www.rttnews.com/3709892/japan-services-pmi-improves-to-51-7-in-october-s-p-global.aspx