Japan’s December PMI data pointed to a modest cooling in overall momentum, while offering tentative signs of stabilization in manufacturing. PMI Manufacturing rose from 48.7 to 49.7. PMI Services eased from 53.2 to 52.5, while PMI Composite slipped from 52.0 to 51.5, indicating slower but still positive private-sector growth.
According to S&P Global, Japan’s private sector ended the year on a relatively strong footing, with output continuing to expand and new business rising further. Firms responded by stepping up hiring, with employment growth accelerating to its fastest pace in more than a year and a half. Growth remained concentrated in services, though the decline in manufacturing output and sales softened noticeable.
Forward-looking signals were more cautious. Business confidence weakened, particularly among manufacturers, reflecting subdued foreign demand and concerns about the outlook for 2026. At the same time, cost pressures intensified, with input prices rising at the fastest pace since April. Firms responded by raising output charges “at a solid pace”.
