Japan’s services sector sentiment index inched up to 44.0 in June 2026 from 43.6 in May, reaching its highest level since February and signaling a continued recovery in business confidence. Although sentiment among household-related businesses remained weak, firmer conditions across the broader services sector supported the overall gain in the index. Corporate confidence also strengthened, led by the non-manufacturing sector, as labor market conditions continued to tighten. Looking ahead, the economic outlook index—which gauges expectations for the coming months—surged to 45.7 from 40.7, its strongest reading in four months. This sharp rise indicates that businesses increasingly expect economic conditions to stabilize, as worries over the fallout from the Middle East conflict have receded.