Japan’s manufacturing sector contracted at its sharpest pace in 19 months in October, as weakening global demand and sector-specific slowdowns in autos and semiconductors weighed heavily on output, a private survey showed Tuesday.
The S&P Global Japan Manufacturing PMI fell to 48.2 in October from 48.5 in September, undershooting the flash estimate of 49.3 and marking the lowest reading since March 2024. The headline index has now remained below the 50.0 threshold — separating growth from contraction — for four consecutive months.
New orders declined at the quickest rate in 20 months, driven by tighter client budgets and sluggish demand both domestically and overseas. Export orders dropped for the 44th straight month, with particularly weak demand from Asia, Europe, and the U.S., though the rate of decline was the slowest since March:
- Demand weakness, particularly in the automotive and semiconductor sectors
- Input cost inflation accelerated to a four-month high, fuelled by rising labour, materials, and transport expenses
- output prices climbed to a three-month high as firms sought to protect profit margins.
- manufacturers grew slightly more optimistic about the year ahead, citing expectations for new product launches, AI adoption, and a recovery in global trade as potential stabilisers
- firms also hope that the impact of U.S. tariffs will fade over time.
The data come as inflation pressures remain elevated, with Tokyo’s CPI accelerating last week, keeping the Bank of Japan under scrutiny after holding rates steady at 0.5% in its latest policy meeting.
—
The sharp PMI drop underscores Japan’s export and industrial fragility, weighing on near-term yen sentiment and regional manufacturing outlooks
