Japan’s services-sector sentiment index rose to 45.7 in July 2026 from 44.0 in June, its highest level since February and above market expectations of 44.0. This marked the third consecutive monthly increase, driven by stronger sentiment among household-related industries, particularly in food and beverage. Corporate confidence also improved, led by gains in the non-manufacturing sector, while labor market conditions continued to tighten.
At the same time, the economic outlook index, which reflects business expectations for the coming months, inched up to 45.8 from 45.7 in June, a five-month high and its third straight monthly rise. The data indicate that firms expect economic conditions to stabilize, even as the conflict in the Middle East continues to exert downward pressure on the outlook.
