The gauge for Japan’s service sector rose to 44.4 in May 2025, up from 42.6 in the previous month - its lowest level since February 2022 - and above market expectations of 43.9. Despite the increase, it marked the fifth consecutive month of overall decline, driven by a drop in the household budget trends index, particularly in the food and beverage sector. The corporate trend index also fell, weighed down by weakness in the manufacturing industry. On the other hand, housing-related other industries and retail trade showed growth, and employment also improved during the period. Meanwhile, the economic outlook index climbed to 44.8 in May from 42.7 in April, supported by expectations of summer bonuses and wage increases, though concerns remained over price pressures and the impact of US trade policy.