Services Sector Contraction Amid Persistent Inflation
Services activity is weakening in major economies while input cost pressures remain elevated, creating a stagflationary environment for central banks.
8 articles · first seen 5/21/2026 · last update 6/3/2026
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- Forexlive6/3/2026, 12:44:24 AMJapan services PMI flatlines in May as war costs hit record high
Japan's S&P Global Services PMI fell to 50.0 in May from 51.0 in April, ending a 13-month expansion streak, as input costs surged to a 43-month high driven by Middle East war-related fuel, energy, and supply chain disruptions. The composite Output Index slipped to 51.1 from 52.2, with remaining growth attributed solely to manufacturing stockbuilding flagged as temporary. New order growth hit a 23-month low, export business fell at the sharpest pace in over four years, and consumer services posted the steepest contraction among all sub-sectors.
Sentiment -0.50Sim 91% - Forexlive6/2/2026, 11:12:08 PMAustralia services PMI slips to 48.7 as Middle East war hammers demand
Australia's S&P Global Services PMI fell to 48.7 in May from 50.7 in April, marking the second contraction in three months, with new orders declining at the fastest pace in nearly two and a half years. Employment fell for the first time since December 2024, while input cost inflation remained near a 39-month high, driven by fuel price increases linked to the Middle East conflict. The Composite Output Index also dropped to 48.7 from 50.4, with S&P Global warning Australia may struggle to generate growth in Q2 2026.
Sentiment -0.55Sim 91% - Forexlive6/1/2026, 12:57:18 AMJapan manufacturing PMI eases to 54.5 in May. Cost pressures hit 32-month high
Japan's S&P Global Manufacturing PMI eased to 54.5 in May from April's 51-month high of 55.1, marking a fifth consecutive month of expansion. Input costs rose to their highest since September 2022 and selling prices accelerated to their fastest since October 2022, driven by metals, energy, labour, and transportation. A notable portion of apparent demand strength reflects precautionary inventory building linked to Middle East supply chain disruption rather than genuine end-user consumption.
Sentiment 0.00Sim 89% - Forexlive5/31/2026, 11:08:16 PMAustralia manufacturing PMI slips to 50.7 in May as new orders hit seven-month low
Australia's S&P Global Manufacturing PMI slipped to 50.7 in May from 51.3 in April, remaining marginally above the expansion threshold but masking deteriorating underlying conditions. New orders fell for a third consecutive month at the steepest pace since October 2025, while selling price inflation hit a 45-month high driven by fuel and shipping cost increases linked to Middle East conflict disruption. Manufacturing output declined for a fourth straight month, and S&P Global warned that official Q2 production data risks showing a contraction unless June conditions improve markedly.
Sentiment -0.35Sim 92% - Forexlive5/21/2026, 12:42:11 AMJapan flash PMI slips to five-month low in May as selling prices hit record high
Japan's flash composite PMI fell to 51.1 in May from 52.2 in April, a five-month low, as services activity stalled at exactly 50.0 for the first time in over 13 months while manufacturing held at 54.5. Selling price inflation reached its highest level in nearly 19 years of survey data, with input costs rising at the fastest pace since October 2022, driven by Middle East supply chain disruptions. The data complicates the Bank of Japan's policy stance ahead of its June meeting, as record price pressures coincide with softening growth momentum.
Sentiment -0.20Sim 89% - Forexlive5/20/2026, 11:11:08 PMAustralia flash PMI slumps to 47.8 in May as new orders fall at fastest pace since 2021
Australia's flash composite PMI fell to 47.8 in May from 50.4 in April, marking the second contraction in three months, with new orders declining at the fastest pace since September 2021. Business sentiment matched its all-time low recorded at the onset of COVID-19 in March 2020, while private sector employment fell for the first time since late 2024. Input price inflation remained elevated, leaving the RBA facing a stagflationary squeeze of weakening demand alongside persistent cost pressures.
Sentiment -0.55Sim 85% - Forexlive5/8/2026, 12:46:55 AMJapan services PMI hits 11-month low in April. War costs bite, input costs 42-month high
Japan's S&P Global Services PMI fell to 51.0 in April from 53.4 in March, an 11-month low, as Middle East war-related fuel costs drove input price inflation to a 42-month high and business confidence to its lowest since the pandemic. The Japan Composite PMI eased to 52.2, with services weakness partially offset by the fastest manufacturing output growth in over 12 years. S&P Global warned the record-pace selling price inflation signals an acceleration in Japan's official CPI, complicating the Bank of Japan's policy path ahead of a widely anticipated June rate decision.
Sentiment -0.30Sim 91% - Forexlive5/4/2026, 11:00:10 PMAustralia April Services PMI (final) 50.7 (preliminary 50.3, prior 46.3)
Australia's S&P Global Services PMI rose to 50.7 in April (final) from 46.3 in March, returning to expansion, though new orders fell for a second consecutive month. Input price inflation accelerated to its fastest pace since August 2022, driven by Middle East fuel costs, with over 43% of respondents reporting rising costs. Business sentiment fell to a 22-month low, and the RBA rate decision is due shortly, with markets pricing a potential third consecutive hike.
Sentiment 0.00Sim 88%