Japan's services growth slows as Middle East war dents confidence, PMI shows

TOKYO, April 3 (Reuters) - Japan's ‌services sector grew ​at ​its weakest pace in three months in March, a private survey showed on Friday, as rising uncertainty over the Middle ‌East war crushed business confidence to its lowest level since ⁠the pandemic.

Here are the key details:

• The S&P Global final Japan Services Purchasing Managers' ‌Index (PMI) fell to 53.4 in ‌March from a 21-month high of 53.8 in February, but topped the flash reading of 52.8 and marked the 12th month of expansion. ​Readings above 50.0 indicate growth in activity, while those below point to a contraction.

• Among key sub-indexes, new business rose at the slowest ⁠pace since December. New export orders, meanwhile, increased at a faster pace from February.

• Business confidence ​fell to its lowest level since September 2020, as firms expressed concern over the impact and duration of the ​Middle East war on global demand and ‌inflation.

• Cost pressures intensified sharply, with input prices rising at the fastest pace in nearly a year. The ⁠Middle East war contributed to higher costs for raw materials, energy and fuel, according to respondents. However, output charge inflation eased from February's near 12-year high.

• Employment ⁠growth slowed to a five-month low, with some firms citing that candidate shortages and ​voluntary departures had limited payroll growth.

• Annabel Fiddes, Economics Associate Director at S&P Global Market Intelligence, said: "Uncertainty over how long the Middle East war might go on for, ‌and its impact on global demand and inflation, was a key factor driving down business confidence in March".

• ‌The broader picture showed Japan's Composite PMI, which includes both manufacturing and ⁠services, fell to 53.0 in March ‌from a 33-month high ​of 53.9 in February, indicating a slower but still robust growth in overall business activities.

(Reporting by Kantaro KomiyaEditing by ‌Shri Navaratnam)

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