Japan PMI Services Finalized at 51.0 as Middle East War Fuels Cost Pressures

Japan’s April PMI services slowed to 51.0 (from 53.4 in March) and the PMI composite eased to 52.2 (from 53.0), signalling softer private‑sector momentum led by services. Manufacturing, by contrast, posted its fastest output gain in over 12 years. Input costs rose at the quickest pace in 3.5 years and firms pushed selling prices up at the steepest rate in nearly two decades, lifting near‑term inflation pressures. Business sentiment fell to its weakest since August 2020. Market impact: a slowing services sector alongside accelerating price pressures complicates the growth‑inflation tradeoff for Japan, likely increasing macro risk perception, weighing on Japan 225 and the yen while keeping inflation and policy expectations elevated.