FX.co ★ Japan Services Sentiment Rises from Over 3-Year Low

In May 2025, Japan's service sector indicator advanced to 44.4, a rise from April’s 42.6, which was its lowest point since February 2022. This figure also exceeded market forecasts of 43.9. Despite the uptick, this signifies the fifth consecutive month of overall sector decline, primarily influenced by a downturn in the household budget trends index, especially notable in the food and beverage sector. The corporate trend index also experienced a drop, mainly due to challenges in the manufacturing industry. Conversely, there was growth in housing-related industries and retail trade, alongside an improvement in employment during this timeframe. Concurrently, the economic outlook index increased to 44.8 in May, up from 42.7 in April, bolstered by expectations of summer bonuses and potential wage hikes. Nevertheless, concerns lingered regarding rising price pressures and the implications of U.S. trade policies.