---
title: "[True Insight Hong Kong Stock Experts] Middle East tensions may hinder Japan's improving economy"
type: "Topics"
locale: "en"
url: "https://longbridge.com/en/topics/39071478.md"
description: "Data shows that Japan's services sector expanded for the 11th consecutive month in February, with the pace of business activity growth reaching its fastest in 21 months. The Japan Services PMI Business Activity Index for February reached 53.8, higher than January's 53.7. This growth was driven by an accelerated increase in new orders, with the pace of new order growth being the fastest since April 2024. Service providers stated that improved demand conditions drove sales growth. This rise was primarily fueled by stronger domestic demand, while new business from overseas only grew at a marginal pace..."
datetime: "2026-03-05T02:10:06.000Z"
locales:
  - [en](https://longbridge.com/en/topics/39071478.md)
  - [zh-CN](https://longbridge.com/zh-CN/topics/39071478.md)
  - [zh-HK](https://longbridge.com/zh-HK/topics/39071478.md)
author: "[真灼财经](https://longbridge.com/en/profiles/1067948.md)"
---

# [True Insight Hong Kong Stock Experts] Middle East tensions may hinder Japan's improving economy

Data shows that Japan's services sector expanded for the 11th consecutive month in February, with the pace of business activity growth reaching its fastest in 21 months.

The Japan Services PMI Business Activity Index reached 53.8 in February, up from 53.7 in January. This growth was driven by an acceleration in new orders, with the rate of new order growth reaching its fastest since April 2024.

Service providers stated that improved demand conditions drove sales growth. This increase was primarily driven by stronger domestic demand, while new business from overseas grew only marginally. Business activity rose across all monitored sub-sectors, with the financial and insurance sector leading the expansion. Job creation in the services sector slowed to a three-month low in February but remained above the survey's long-term average.

Regarding input costs, they rose at a faster pace in February, well above the average. Service providers raised selling prices at the fastest rate since April 2014, as more firms passed on higher costs to customers.

Increased workloads put pressure on capacity, leading to a further accumulation of backlogs. Business confidence regarding the one-year activity outlook improved in February. Firms expressed hopes that customer demand would continue to rise, while investment in new capacity boosted expectations.

Japan's Composite PMI Output Index, which combines manufacturing and services data, rose from 53.1 in January to 53.9 in February. This marks the fastest growth in overall private sector output in 33 months.

Composite new orders expanded at the strongest pace in 33 months, with both manufacturers and service providers recording robust sales growth rates. Overall new export business grew at the fastest pace in eight years, mainly due to improved external demand for manufactured goods.

On the other hand, Japanese Finance Minister Shunichi Suzuki stated that Japan is closely monitoring financial markets with the highest vigilance, given increased market volatility following US and Israeli attacks on Iran, and will take necessary measures against any sharp fluctuations.

Suzuki made these remarks as geopolitical tensions in the Middle East escalated again, unsettling markets and increasing pressure on the yen. As a major energy importer, Japan needs to closely monitor fuel supply disruptions and their potential impact on prices and the economy.

Middle East tensions will push up import costs and reignite inflation concerns. Approximately 90% of Japan's crude oil imports come from the Middle East.

Japanese Trade Minister Ryosei Akazawa stated that the government has established an Energy Countermeasures Headquarters to coordinate responses and will take action to minimize the impact on Japan's economic activities. Following an attack by Iranian drones, Qatar has suspended liquefied natural gas (LNG) production at the world's largest export facility. Japan's current LNG reserves are sufficient for about three weeks, with about 4% of its LNG imports coming from Qatar. Akazawa stated that the government currently has no concrete plans to release part of its oil reserves.

Written by: Professor Li Hui Fen, Greater Bay Area Family Office Association

(The author does not hold the above-mentioned stocks)