Japan’s PMI Manufacturing was finalized at 49.1 in July, down from June’s 50.0, indicating that the sector is back in contraction streak since early 2023.
Usamah Bhatti of S&P Global Market Intelligence described the sector’s performance as “downbeat” at the start of Q3. The decline was driven by a stronger reduction in new orders, leading to a renewed fall in production levels.
Inflationary pressures remained high, with input price inflation reaching a 15-month peak. Despite this, firms raised their selling prices more cautiously to stay competitive.
The near-term outlook appears “muted” due to the lack of new order inflows, allowing firms to clear outstanding business at the fastest rate since March. However, firms are optimistic that this period will pass within the coming year, expecting business expansion and new product launches to coincide with a broader economic recovery.
