Japan Composite PMI Slips to 5-Month Low

Japan’s S&P Global Composite PMI rose to 52.5 in June 2026 from a final 51.1 in May, according to flash estimates. The reading was the highest since March, marking the 15th month of expansion in private-sector activity and remaining above the post-pandemic average. Growth was driven by the strongest increase in manufacturing output since January 2022, while services activity grew modestly. New orders rose the most in four months, supported by a slight rise in foreign demand. Backlogs of work increased at the fastest pace in four months, though employment rose modestly after May’s seven-month low. On inflation, input cost accelerated for a fifth month to its strongest since July 2022, due to higher energy, fuel, and raw material costs linked to the Middle East war. That said, output price inflation eased from May’s record. Lastly, sentiment weakened further and remained below its average, reflecting supply chain disruptions from the Middle East conflict and persistent labor shortages.

Japan’s S&P Global Composite PMI stood at 51.1 in May 2026, matching flash data and marking the 14th straight month of expansion in private sector activity. However, the latest reading eased from 52.2 in April and pointed to the weakest growth since December, as overall activity was supported solely by stronger manufacturing output while the services sector stagnated. New business continued to rise but at the slowest pace in five months, reflecting only modest demand growth. External demand also softened, with overseas orders for Japanese goods and services increasing at the weakest rate so far this year. Employment growth slowed to a seven-month low, contributing to a faster accumulation of backlogged work. At the same time, cost pressures intensified, with input prices rising at the sharpest pace in 43 months. Firms responded by raising selling prices more aggressively, pushing output charge inflation to a new survey record.

Japan’s S&P Global Composite PMI slipped to 51.1 in May from a final 52.2 in the previous month, flash data showed. It marked the slowest private-sector growth since December, but extended the expansion streak to 14 months. Momentum weakened as services stagnated for the first time in over a year, while manufacturing output rose partly on stockpiling amid Middle East tensions. Total new orders grew at the weakest pace in five months, though foreign demand edged higher. Employment gains slowed to a seven-month low despite a mild rise in backlogs. On prices, input costs climbed at the fastest rate since late 2022, driven by supply disruptions and higher energy and raw material prices, prompting firms to lift selling prices at the sharpest pace in nearly 19 years of data. Looking ahead, business sentiment ticked up to a three-month high but remained historically subdued as firms flagged supply chain risks, inflation, and fallout from the Middle East war.