Japan’s service sector gauge rose to 45.0 in June 2025, up from 44.4 in the previous month but slightly below market expectations of 45.2. Despite the improvement, the reading marked the fifteenth consecutive month of overall contraction, driven by continued weakness in the service industry and employment conditions. However, household-related activity improved, supported by growth in the food and beverage sector. Business-related trends also rose, aided by gains in the non-manufacturing sector. Meanwhile, the economic outlook index increased to 45.9 in June, up from 44.8 in May, marking the highest level in four months, supported by expectations of summer bonuses and wage hikes, though concerns remained over signs of a weak economic recovery.
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