Key facts
- Japan's factory output fell 1.7% in August from the previous month.
- Manufacturers expect output to increase 3.2% in September and 3.1% in October.
Japan's factory output saw a 1.7% decrease in August compared to the prior month, contrary to the median market forecast of a 1.7% rise, according to government data released on Wednesday. The Ministry of Economy, Trade and Industry's survey indicated that manufacturers anticipate a seasonally adjusted output increase of 3.2% in September and a further 3.1% growth in October. Separately, Japan's benchmark Nikkei 225 index dipped by 0.6% to close at 42,636.74, influenced by a survey showing a contraction in factory activity for the second consecutive month in August. This downturn in manufacturing, a key economic sector, signals potential weaknesses that could affect Japan's export-oriented industries, particularly amid global trade headwinds and subdued global demand. The S&P Global flash Japan Manufacturing Purchasing Managers' Index (PMI) for August was 49.9, remaining below the 50-point threshold for the thirteenth time in 14 months. This persistent contraction is attributed to a decline in overall sales, especially foreign sales, partly due to new US tariffs and weak demand from the US and China. In contrast, Japan's services sector showed resilience with a Services PMI of 52.7, and the composite PMI stood at 51.9.