Services PMI

The au Jibun Bank Japan Services PMI is a monthly Purchasing Managers' Index, a survey of managers on business conditions, compiled by S&P Global. It covers around 400 Japanese service firms, from consumer services excluding retail to transport, information, communication, finance, insurance, real estate and business services. Running since September 2007 and sponsored by au Jibun Bank, the panel is stratified by sector and workforce size by share of GDP. Its headline is the Services Business Activity Index, a diffusion index showing breadth of change, tracking momentum only, not manufacturing, retail or output levels.

Survey responses are collected in the second half of each month and show change versus the previous month. The final Services PMI is released with the GDP-weighted Composite Output Index on the third working day at 09:30 JST, or 00:30 UTC. The final manufacturing PMI lands on the first working day. A flash for manufacturing, services and composite appears about one week earlier at 09:30 on about 85% to 90% of responses.

Japan uses UTC+9 with no daylight saving, so the date shifts with holidays because the rule uses working days. Each release carries economist commentary and charts for activity, employment and prices. Final data are never revised, but seasonal adjustment factors may be revised and shift the adjusted series.

Services activity moves with demand, unfinished work, hiring and prices.

• Business Activity: change in the volume of services activity versus the previous month, the headline.
• New Business: change in total new work received, showing demand inflow.
• New Export Business: change in new work from abroad, including inbound tourism.
• Outstanding Business and Employment: work in hand not yet completed plus staffing levels, showing capacity pressure.
• Input Prices and Output Prices: change in operating expenses and prices charged for services.
• Future Output: expected activity over the next 12 months, showing confidence.

In the June 5, 2023 release for May 2023 data, the Services Business Activity Index rose to 55.9 from 55.4 for a fresh series record. Stronger customer demand helped as pandemic effects waned and tourism resumed. Total new business, new export orders and outstanding business all hit series records, while employment grew at its second fastest pace behind April 2019. The 12-month outlook stayed near its peak, and input price inflation eased to its joint softest in 14 months.

Output charges rose at a softer rate for the first time since the start of the year but stayed solid. The Composite Output Index reached 54.3, up from 52.9 in April, its second strongest since September 2007.

1. Survey answers: Each firm reports whether conditions are higher, unchanged or lower versus the previous month.
2. Diffusion index: For each variable, the index equals the percentage reporting higher plus half the percentage reporting unchanged. For example, with 35% higher and 45% unchanged among 400 firms, the raw index is 35 plus 22.5, or 57.5. After adjustment it is 57.4, above 50, so growth.
3. Seasonal adjustment: Each index is then seasonally adjusted.
4. Headline and 50 line: The Services Business Activity Index alone is the headline, with no weighting. A reading above 50 means growth versus the previous month, while below 50 means decline.