Japan’s services sector sentiment index rose to 43.6 in May 2026 from 40.8 in April, reaching its highest level since February and indicating an improvement in business confidence. The increase was driven mainly by stronger household-related activity, particularly in the food and beverage segment, as consumer demand remained relatively resilient. Corporate sentiment also improved, supported largely by robust manufacturing-related activity, while continued tightening in labor market conditions further bolstered overall confidence.
Looking ahead, the economic outlook index, which measures expectations for the coming months, climbed to 43.8 in May from 40.8 in April, its highest reading in three months. This improvement suggests that businesses anticipate a stabilization in conditions despite ongoing headwinds from the conflict in the Middle East.