Japan Composite PMI Confirmed at 3-Month High

Japan’s S&P Global Composite PMI Japan edged up to 53.0 in March 2026 from a flash estimate of 52.9, but eased from February’s 33-month high of 53.9. The latest reading marked a 12th consecutive month of private sector expansion, topping market forecasts of 52.5, though growth slowed to its weakest pace since December. Output growth moderated across both manufacturing and services, while total new orders rose at the softest pace so far this year. New export orders also expanded only modestly, cooling from February’s eight-year high. Employment growth softened to a four-month low, reflecting a slower buildup in backlogs of work. On the cost side, input price inflation accelerated to an 11-month high, but firms raised selling prices at a more subdued pace. Meanwhile, business confidence slipped to its lowest level in nearly a year, pointing to a more cautious outlook ahead.

Japan’s S&P Global Composite PMI slipped to 52.9 in March from a final 53.9 in February, flash data showed. While marking a 12th straight month of expansion in private sector business, the latest result was the weakest pace since December. Both manufacturing output and services activity lost momentum, with new orders rising at the weakest rate in three months and export demand expanding only modestly. Employment growth eased to a four-month low, while capacity pressures persisted, though backlogs rose less sharply than February’s record pace. On inflation, input costs climbed at the fastest rate in nearly a year, linked to supply chain disruptions and higher energy prices from the Middle East conflict. Yet output price inflation softened to a three-month low. Finally, business sentiment fell to an 11-month low amid geopolitical uncertainty, driven by weaker expectations in the service sector, while manufacturers remained relatively optimistic.

Japan’s S&P Global Composite PMI rose to 53.9 in February 2026, slightly higher than the preliminary estimates of 53.8, and picking up from 53.1 in January, marking the fastest expansion in overall private sector activity since May 2023. Growth was supported by a solid gain in services activity alongside a notably quicker rise in manufacturing output. Overall new orders increased at the strongest pace in 33 months, while new export business expanded at the fastest rate in eight years, driven by stronger external demand for manufactured goods.Employment continued to rise at a solid but slightly slower pace, and backlogs of work accumulated amid rising workloads. Input costs climbed sharply, and selling prices increased to the greatest extent since May 2024 as firms passed on higher expenses to customers.