Japan Composite PMI Rises to 6-Month Peak

Japan’s S&P Global Composite PMI Business Activity Index rose to 53.4 in August 2026 from a final 52.7 in July, flash data showed. It was the highest reading since February, also marking a 17-month expansion streak in private-sector activity, driven by a sharp rebound in manufacturing output and faster services activity. New orders grew the most in six months, though foreign demand diverged: manufacturers saw export sales surge at the fastest rate since early 2018, while service providers faced a steep drop in overseas business. Firms expanded headcounts for the 35th straight month, with job creation accelerating slightly. Input cost inflation eased to a five-month low but stayed elevated, fueled by higher raw materials, energy, and wage pressures, compounded by a weak yen and Middle East conflict. Selling prices continued to rise at one of the fastest rates on record. Finally, sentiment improved to its highest since February, signaling optimism despite persistent cost challenges.

Japan’s S&P Global Composite PMI Business Activity Index was revised lower to 52.7 in July 2026 from the flash estimate of 53.1 and edged lower from 52.8 in the previous month. Even so, the latest reading remained the highest since February, signaling a 16th consecutive month of expansion in private-sector activity. Growth was uneven across sectors, with factory output posting its strongest increase since early 2014, while services activity expanded at a slower, more modest pace. New orders continued to rise but at a softer rate, although export demand strengthened further. Employment increased for a 34th straight month, though hiring eased slightly from June, alongside a slower accumulation of backlogged work. On the inflation front, input costs continued to rise at a historically elevated pace despite easing to a three-month low. Firms passed higher costs on to customers, lifting selling prices at the second-fastest rate since the survey began in late 2007.

Japan’s S&P Global Composite PMI Business Activity Index edged up to 53.1 in July 2026 from a final 52.8 in the prior month, flash data showed. It was the highest reading since February, marking the 16th straight month of expansion in private sector activity. Manufacturing output surged at the fastest pace since 2014, while services growth eased. Overall new orders rose more slowly, reflecting weaker service demand, though foreign sales climbed at the quickest rate in four months. Hiring extended its 34-month run, with employment growth steady, but capacity strains mounted as backlogs built at the fastest pace since February’s record. On prices, input cost inflation hit its lowest since April yet remained elevated amid Middle East conflict-driven supply and energy pressures. Firms raised selling prices more sharply, while business confidence softened from June, weighed by concerns over energy costs, raw materials, and supply chain risks tied to the ongoing geopolitical uncertainty.