Japan Composite PMI Confirmed at 5-Month Low

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.

Japan’s S&P Global Composite PMI eased to 52.2 in April, below the flash reading of 52.4 and down from 53.0 in March. It was the 13th straight month of private-sector expansion, though it marked the softest pace since December. Sector trends diverged, with services activity slowing while manufacturing output posted its strongest growth in more than 12 years. Total new orders continued to rise modestly, with the pace of growth edging up from March. However, foreign demand grew at the slowest rate so far this year, pointing to softer external conditions. Employment growth also remained steady as firms continued to add staff. On the price front, input cost inflation accelerated to a 42-month high, driven by rising labor and raw material costs. Firms responded by raising selling prices at the fastest pace on record. Finally, business confidence weakened sharply, falling to its lowest level since the COVID pandemic amid concerns over costs and the broader economic outlook.