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Japan flash PMI slows to four-month low as prices stay intense

The composite output index fell to 52.5 in September, while selling price inflation stayed near an August record and hiring accelerated, reinforcing Bank of Japan worries about yen-driven cost pressure.

Reported · Written up by our desk · Major Pairs

Japan’s flash composite PMI fell to 52.5 in September from 53.5, a four-month low, as softer domestic demand weighed on activity, according to flash PMI data from S&P Global reported by Forexlive.

The survey showed inflation staying elevated, with selling price inflation held near August’s survey record, and hiring rising at its fastest pace since February, keeping the inflation side of the Bank of Japan’s case intact even as growth cooled.

Forexlive said the survey’s link between cost pressures and the weak yen may increase policymakers’ sensitivity to further currency weakness, and JGBs were likely to get little relief since selling prices remain close to record levels and government bonds are already under pressure from the global rise in yields.

The PMI also indicated demand was soft on the home front rather than abroad, with new export orders rising at the same rate as in August, while services overseas demand continued to drop.

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