Japan’s services sector continued to expand in September, although the pace of growth eased from the five-month high recorded in August, according to the latest purchasing managers’ survey.

The survey showed softer growth in business activity and new orders, indicating that momentum in the world’s fourth-largest economy became more cautious as the quarter drew to a close. Recent earthquake-related disruptions also weighed on demand in some areas, according to the survey commentary.

Services account for a large share of Japan’s economy, so the monthly PMI is closely watched for clues about domestic demand, hiring and business confidence. A reading above 50 signals expansion, while a figure below that level indicates contraction.

The latest figures suggest the sector is still growing, but at a less vigorous pace than in August. That leaves investors and policymakers watching whether household demand and corporate spending remain resilient as businesses deal with higher costs and an uncertain external environment.

The data will also feed into expectations around the Bank of Japan, which has been balancing inflation pressures against signs of uneven growth across different parts of the economy.

Source: Reuters, October 5, 2026. Photo: Unsplash/Louie Martinez.