Japan Composite PMI Stays at 4-Month Low

Japan’s S&P Global Composite PMI Business Activity Index held steady at 52.3 in October 2026, unchanged from September’s final reading, flash data showed. This marked the 19th consecutive month of private-sector expansion, although growth remained at its slowest pace since May. Stronger services activity was accompanied by the slowest increase in manufacturing output since March. New orders grew at their weakest pace in three months, while new export orders continued to rise. Employment growth slowed to a 14-month low, with hiring trends diverging between sectors, while backlogs of work increased further. On the price front, input costs rose sharply, but selling price inflation eased to a four-month low. Meanwhile, persistent inflation concerns weighed on business sentiment, with year-ahead output expectations falling to their lowest level since July.

Japan’s S&P Global Composite PMI Business Activity Index eased to 52.3 in September 2026 from 53.5 the previous month and a flash estimate of 52.5. While marking the 18th consecutive month of private-sector expansion, the latest result was the slowest growth since May, with activity growth moderating across both manufacturing and services. Total new business increased at a softer and more modest pace, while new export business remained solid, driven entirely by manufacturers. Employment rose at its fastest pace since February, alongside a stronger increase in backlogs of work, suggesting continued capacity pressures. On prices, inflationary pressures remained historically elevated, although growth in input costs and output charges eased from August. Finally, business confidence improved to a seven-month high, indicating firms remained optimistic about activity over the coming year.

Japan’s S&P Global Composite PMI Business Activity Index edged down to 52.5 in September 2026 from a final 53.5 in August, flash data showed. It was the weakest reading since May, with factory output falling to a three-month low, while services activity grew at a softer, modest pace. Total new orders eased despite another marked increase in new export work, with export growth holding at August’s 8-1/2-year high. Employment rose for the third year, with payroll growth accelerating to its fastest pace since February. Outstanding business accumulated the most in seven months. On prices, input cost inflation eased to a four-month low but remained elevated, reflecting higher energy and raw material costs linked partly to the Middle East war and a weaker yen, alongside rising staff and transport expenses. Firms raised selling prices at a pace only slightly below August’s record. Finally, sentiment hit a seven-month high on optimism over demand in AI, semiconductors, defence and automobiles.