Japanese Services Slump, but Better Than Feared
The Japanese Tertiary Industry Index for June showed a contraction of -0.2%, which was better than expected but still slower than the previous month's 1.1% growth.
The tertiary index measures the bulk of Japan's services activity, making it a closer reading on domestic demand than the factory-side releases. However, this data point has historically been considered secondary to the Bank of Japan's policy path and consumption narrative.
The release predates the current month materially, which reduces its signal value further. Analysts will be looking at more heavily weighted indicators, such as household spending, CPI pipeline, and Tankan services components, to determine whether the services slowdown has a significant impact on domestic demand.