Key facts
- Japan's manufacturing PMI fell to 54.1 in September, the slowest expansion in six months.
- Output and new orders growth slowed in September.
- New export orders saw their second-fastest growth since January 2018.
- Employment increased for the 22nd consecutive month.
- Input cost inflation eased to a six-month low, but selling prices rose sharply.
Japan's manufacturing sector experienced its slowest expansion in six months in September, according to a survey by S&P Global. The Purchasing Managers' Index (PMI) dropped to 54.1 from 54.9 in August, matching its flash reading. This marks the ninth consecutive month of expansion, but the pace has moderated due to slower increases in output and new orders.
Firms reported that clients were adjusting inventories, leading to a slowdown in order growth, which was the weakest in four months. However, overseas demand remained strong, with new export orders rising for the ninth consecutive month at their second-fastest pace since January 2018, supported by demand from Asian economies and the US. Employment continued to grow for the 22nd month in a row, at a pace close to August's recent high.
While input cost inflation eased to a six-month low, manufacturers continued to raise selling prices significantly. Optimism about future output remained high, with firms citing demand for semiconductors and AI-related technology, although supply disruptions, component shortages, and rising costs were noted as risks.