Japan Manufacturing Growth Matches Estimates

The S&P Global Japan Manufacturing PMI declined to 54.5 in May 2026 from 55.1 in April, which was the highest reading since January 2022 and in line with market forecasts, preliminary estimates showed. However, the latest reading still signaled expansion, though at a softer pace, as output continued to rise. Production growth was partly supported by stockpiling efforts, as the war in the Middle East continued to impact product availability and drive up prices. Meanwhile, new order growth eased, while foreign sales increased. Employment also rose, with backlogs of work building up. On prices, input prices increased due to material shortages, while selling prices also rose in response to higher input costs. Looking ahead, business confidence remained positive.

The S&P Global Japan Manufacturing PMI rose to 55.1 in April 2026, exceeding the flash estimate of 54.9 and accelerating from 51.6 in March. This was the highest reading since January 2022, with output growing the most since February 2014 amid a solid rise in new orders, the quickest in over two years, as the war in the Middle East prompted customers to frontload purchases to avoid potential supply disruptions and rising costs. Employment increased at the second-fastest pace since early 2022. Yet supply strains deepened: backlogs surged at the sharpest pace since 2014, while delivery times lengthened most since 2011. Purchasing activity stayed firm, though it eased from March. On prices, input costs jumped at the fastest rate since Oct. 2022 due to higher raw material, energy, and transport expenses, prompting selling prices to rise at the quickest pace since late 2022. Finally, confidence weakened to its second-lowest since June 2020 amid geopolitical risks and broader uncertainty.

The S&P Global Japan Manufacturing PMI increased to 54.9 in April 2026 from March’s 51.6, surpassing market forecasts of 51.2, preliminary estimates showed. The latest figure marked the fourth straight month of expansion in factory activity and the fastest growth since January 2022. Output grew at the fastest pace since February 2014, indicating that manufacturers increased production amid concerns over future supply shortages stemming from the war in the Middle East. Meanwhile, new orders rose modestly, though the pace of increase strengthened slightly from March, with export orders rising faster. As a result, firms raised employment at a faster pace. Meanwhile, delivery times rose at the fastest pace in nearly four years. On prices, input cost inflation accelerated due to the war in the Middle East and ongoing supply chain strain. Lastly, business sentiment deteriorated amid uncertainty about the impact of the war in the Middle East.