13.05.202605:20:06UTC+00Japan Services Sentiment Drops to Over 4-Year Low

Japan’s services sector sentiment index declined to 40.8 in April 2026 from 42.2 in March, falling short of market expectations of 41.6 and marking its lowest level since February 2022. This was the second consecutive monthly drop, underscoring a subdued domestic recovery amid mounting uncertainty related to tensions in the Middle East.

Household-related indicators weakened markedly, pointing to softer spending conditions as consumers became more cautious in the face of higher living costs and external risks. The corporate activity index also fell, weighed down primarily by weakness in the non-manufacturing sector, while employment conditions deteriorated further, signaling a slowdown in hiring momentum among service-sector firms.

By contrast, the economic outlook index, which gauges sentiment for the months ahead, inched up to 39.4 from March’s more than five-month low of 38.7. This modest improvement suggests that some respondents expect conditions to stabilize, even as uncertainty remains elevated.