Solid wage gains and inflation concerns continue to support the Bank of Japan’s potential rate hike trajectory despite cooling activity.
Japan’s services sector expansion eased in July, with the S&P Global Services PMI revised downward to 51.2 from an earlier estimate. The reading signals a moderation in private sector growth, though it remains above the 50 threshold indicating expansion.
The slowdown follows a period of steady growth, with prior months showing stronger activity. Analysts had anticipated a more robust print, but persistent inflation and wage increases keep pressure on the Bank of Japan to consider further policy tightening.
Markets remain focused on the BoJ’s next moves, as wage growth and inflation concerns outweigh the softer PMI data.