AI Data Insight
The latest Japan services PMI for May 2026 dropped to 50.0, a significant pullback from 51.0 in April, ending a 13-month expansion period and stagnating. The Middle East situation pushed up energy and raw material costs, leading to a 43-month high in corporate input prices, while the increase in final selling prices approached historical records. Caught in the double whammy of weak domestic demand and rising inflation, the Bank of Japan's subsequent pace of interest rate hikes may face greater challenges.