Japan Manufacturing PMI Confirmed at Lower Level

The S&P Global Japan Manufacturing PMI increased to 54.9 in June 2026, above both May's reading and market expectations of 54.5 and close to April's 55.1, which marked the strongest expansion since January 2022, preliminary estimates showed. It was the sixth straight month of growth in factory activity, supported by faster growth in output and new orders. Output growth was the second-quickest since January 2022. New orders grew at a faster pace, with sales rising at their fastest rate since January 2022, partly driven by client stock-building amid ongoing supply disruptions and concerns over future price increases related to the Middle East conflict, while foreign sales rose at a slightly slower pace. Meanwhile, employment increased at the steepest pace in more than eight years. On prices, input and output inflation eased but remained near their highest levels since late 2022, boosted by higher energy, fuel, and raw material costs. Meanwhile, sentiment remained in positive territory.

The S&P Global Japan Manufacturing PMI was confirmed at 54.5 in May 2026, matching the preliminary estimate and following a reading of 55.1 in April, which was the highest since January 2022. However, the latest reading still signaled expansion, albeit at a slower 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. However, total new order growth slowed slightly despite a stronger rise in foreign demand, with new export business increasing at the fastest pace in five years. Purchasing activity increased to guard against future shortages, while employment rose solidly. On prices, input price inflation accelerated to the fastest pace since September 2022 due to higher material prices, while selling prices rose at the quickest pace since October 2022. Finally, sentiment improved amid hopes of stronger consumer demand and new product development.

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 modestly. 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.