Japan services activity rebounds as input costs hit four-year inflation high

AI summary

<p class="font-claude-response-body break-words whitespace-normal">Before we begin, make sure you have seen this:</p><ul><li><a href="https://investinglive.com/forex/japan-shifts-to-ambush-tactics-against-yen-speculators-sources-tell-reuters-20260702/" rel="follow" target="_blank">Japan shifts to ambush tactics against yen speculators, sources tell Reuters</a></li></ul><p class="font-claude-response-body break-words whitespace-normal">--- </p><p class="font-claude-response-body break-words whitespace-normal">The rebound in Japan's services PMI to a modest but genuine expansion, alongside the fastest input cost inflation since June 2022, keeps pressure on the Bank of Japan's case that underlying price momentum remains firm enough to justify further policy normalisation, even as officials weigh soft business confidence against resilient domestic demand. The divergence between strong domestic new work and weakening export orders, tied to falling tourist numbers and subdued overseas demand, points to a two-speed economy that could complicate the yen outlook if inbound tourism continues to soften. Subdued year-ahead sentiment, driven largely by Middle East war uncertainty rather than domestic factors, suggests firms remain cautious on investment despite June's improved headline numbers.</p><p class="font-claude-response-body break-words whitespace-normal">--- Japan services activity rose to 52.2 in June from 50.0, the strongest new work growth in two years, but input costs climbed