Asia's Business Activity Cools in March Amid War, Energy Costs

Asia's business activity cooled in March amid escalating energy costs and uncertainty from the war in the Middle East, with Japan's services and manufacturing sectors showing the sharpest slowdowns as firms grappled with higher input prices and diminished confidence.

A private survey indicated that Japan's services sector expanded at its weakest pace in three months, with the S&P Global Japan Services Purchasing Managers' Index falling to 53.4 from 53.8 in February. The reading, which marks 12 straight months of growth above the 50 expansion threshold, exceeded an initial estimate of 52.8. New business orders rose at the slowest rate since December, though export orders increased more briskly. Business confidence plunged to its lowest level since September 2020, driven by concerns over the conflict's duration and its effects on global demand and inflation. Input costs surged at the fastest pace in nearly a year, fueled by elevated prices for energy, fuel and raw materials linked to the war. While firms passed on some expenses, output price inflation eased from February's multiyear high. Employment growth also moderated to a five-month low, hampered by candidate shortages and...