TOKYO, July 3 (Reuters) - Japan's services sector returned to expansion in June after stalling the previous month, though business confidence remained subdued amid concerns over Middle East tensions and intensifying cost pressures, a private survey showed on Friday.
• The S&P Global final Japan Services Purchasing Managers' Index (PMI) rose to 52.2 in June from 50.0 in May, signalling a renewed rise in business activity. Readings above 50.0 indicate growth in activity, while those below point to a contraction.
• The upturn marked the 14th expansion in the past 15 months, with the exception of May, though the pace of growth was modest and slightly softer than the average seen over the past year.
• New business increased at one of the quickest rates seen over the past two years, despite a further marked reduction in new export business, which has now fallen for three consecutive months. Some firms noted stronger demand across the transport sector, linked to new product releases and events.
• Cost pressures intensified sharply, with input prices rising at the fastest pace since June 2022, driven by increases in oil, energy, food and wages. However, prices charged for goods and services to customers eased from May's near-record high.
• Employment growth remained modest, quickening from May's recent low but staying below the average recorded over the 10-month period of payroll growth.
• Annabel Fiddes, Economics Associate Director at S&P Global Market Intelligence, said: "Although growth momentum improved, overall business confidence strengthened only slightly in June, as uncertainty over the war and rising expenses weighed on forecasts."
• The broader Composite PMI, which includes both manufacturing and services, climbed to 52.8 in June from 51.1 in May, marking the strongest expansion in three months.
(Reporting by Kaori Kaneko; Editing by Jacqueline Wong)
