Japan’s manufacturing sector contracted further in September, with the PMI finalized at 48.5, down from August’s 49.7. S&P Global’s Annabel Fiddes said the sector ended Q3 “on a weaker note,” as output and new orders declined at a faster pace, driven by softer demand across key markets such as China and the drag from US tariffs.
Weaker demand weighed on business confidence, leading firms to scale back activity. Employment expanded at the slowest pace since February, while purchasing activity dropped at the second-steepest rate since early 2024. The cautious stance underscores concern that the sector may “struggle to see much growth in the near term.”
Price dynamics offered some relief, with cost pressures “less pronounced” than earlier in the year. Still, selling prices rose at a “historically strong pace” as firms sought to protect margins.
