Japan Services PMI Hits 52.5 as Near-Record Prices Bolster BOJ Hike Case
Updated
Updated · investinglive.com · Sep 3
Japan Services PMI Hits 52.5 as Near-Record Prices Bolster BOJ Hike Case
3 articles · Updated · investinglive.com · Sep 3
Summary
Japan’s final services PMI rose to 52.5 in August from 51.2, the strongest reading in five months and a third straight month of expansion.
Output charges increased at the second-steepest pace on record, while composite selling prices rose at their fastest rate since late 2007, reinforcing expectations for another Bank of Japan rate hike.
Domestic demand drove the gain—new business grew for a 26th month on firmer client enquiries and public-sector projects—while new export business shrank for a fifth month and at the sharpest pace since November 2020.
Employment rose for a 12th straight month but only marginally, the weakest hiring pace in a year, even as the broader composite PMI climbed to 53.5, a six-month high.
S&P Global linked persistent cost pressure partly to Middle East supply disruption and the weak yen, a mix that supports policy normalization but leaves BOJ officials balancing inflation risks against soft external demand.
With export demand plummeting, could the Bank of Japan's aggressive rate hikes inadvertently crush the very domestic growth keeping the economy afloat?
As service prices surge and JGB yields hit three percent, is Japan finally escaping decades of deflation or entering a dangerous stagflation trap?
Will the upcoming September BOJ rate hike shock global markets by rapidly reversing years of cheap yen carry trades?