Japan’s composite PMI eased to 52.4 (exp. 51.4) as manufacturing surged to 54.9 but services slowed to 51.2. Strong factory output offset weaker domestic demand, while rising costs and falling confidence point to a more uneven growth outlook.
Summary:
- Manufacturing PMI: 54.9 (exp. 51.8, prev. 51.6) → strong upside surprise
- Services PMI: 51.2 (exp. 52.0, prev. 53.4) → notable slowdown
- Composite PMI: 52.4 (exp. 51.4, prev. 53.0) → softer overall growth
- Manufacturing output posts strongest rise in over 12 years
- Price pressures intensify; confidence falls to 2020 lows
Japan’s private sector continued to expand in April, though underlying momentum softened as a sharp acceleration in manufacturing activity was offset by a slowdown in services.
Flash data from S&P Global showed the composite PMI eased to 52.4 from 53.0 in March, coming in above expectations for 51.4 but marking the slowest pace of expansion in four months. Despite the moderation, the index remained firmly above the 50 threshold, extending the current growth streak to 13 consecutive months.
The key driver of the release was a significant upside surprise in manufacturing. The manufacturing PMI jumped to 54.9 from 51.6, well above expectations, while output rose at the fastest pace in more than 12 years. The strength reflects a combination of improved new orders and a proactive increase in production, with firms reportedly ramping up activity amid concerns about potential supply disruptions linked to the Middle East conflict.
In contrast, the services sector lost momentum. The services PMI fell to 51.2 from 53.4, undershooting expectations and marking the slowest expansion in nearly a year. Growth in both activity and new business moderated, suggesting that domestic demand conditions are softening.
New business across the private sector continued to rise, though only modestly, with gains driven by manufacturing while services demand slowed. Export orders showed a mixed picture, with goods producers seeing stronger demand, while services exports weakened.
Inflation pressures intensified across the economy. Input costs rose at the fastest pace since early 2023, with firms citing higher prices for energy, raw materials and labour. These pressures were linked in part to geopolitical developments and a weaker currency, and were increasingly passed on to customers, pushing output price inflation to a record high for the survey.
Supply chain conditions also deteriorated, particularly in manufacturing, where delivery times lengthened sharply amid shipping disruptions and logistical constraints tied to the Middle East situation.
Despite ongoing expansion, confidence weakened notably
