Japan Services Sentiment Hits 5-Month High

Japan’s service sector index edged up to 45.2 in July 2025 from 45.0 in June, marking the highest level since February and the third consecutive monthly gain, though it came in below market expectations of 45.5. The household budget trend index rose, supported by improvements in the service sector despite a decline in retail activity. In contrast, the corporate trend index fell, pressured by weaker output in the non-manufacturing sector. Employment also declined during the month. Meanwhile, the economic outlook index climbed to a six-month peak of 47.3 from 45.9 in June, supported by signs of economic recovery, including expectations of stronger consumer demand, despite ongoing concerns over cost pressures and uncertainty tied to U.S. trade policy.