Japan’s services sector sentiment index fell to 46.1 in October 2026 from 47.0 in the previous month, missing market expectations of 46.8 and marking the lowest reading since July. The decline halted a five-month improvement, reflecting weaker sentiment among household-related businesses, particularly in retail, although confidence in the food and beverage sector improved. Conversely, corporate sentiment strengthened, largely supported by the non-manufacturing sector. At the same time, labor market conditions also deteriorated. Meanwhile, the economic outlook index, which measures business expectations for the months ahead, dropped to 46.5 from 47.4 in September, reaching a three-month low. The latest result reflected growing concerns and uncertainty surrounding the Middle East tensions, despite continued signs of recovery in the broader domestic economy.