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Japan manufacturing PMI final falls to 54.5 in July

The final S&P Global Manufacturing PMI marked a seventh straight month in expansion as output rose at its fastest pace in nearly 12.5 years and hiring increased, even as capacity pressures and higher selling prices persisted.

Reported · Written up by our desk · Major Pairs

Japan’s manufacturing activity remained in expansion territory in July, with S&P Global’s final Manufacturing PMI edging down to 54.5 from 54.8 in June, signaling a continued improvement for a seventh consecutive month, according to data covered by Action Forex.

The report pointed to broad strength beneath the headline. Manufacturing output posted its strongest increase in nearly 12-and-a-half years, helped by the steepest rise in new orders in four-and-a-half years. S&P Global attributed much of the improvement to stronger global demand for semiconductors and expanding AI-related manufacturing activity.

While firms stepped up hiring, production and order inflows also intensified capacity pressures, leading to a sharp rise in purchasing activity and inventory accumulation. Action Forex notes that geopolitical risks continued to affect the supply chain, with companies building inventories related to the conflict in the Middle East.

Input cost inflation moderated from June but remained elevated, continuing to feed through to higher selling prices. The survey therefore describes a sector supported by structural demand drivers, alongside supply-chain and inflation risks tied to geopolitical uncertainty.

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