Japan’s manufacturing sector strengthened further in June, with the S&P Global Manufacturing PMI rising from 54.5 to 54.8, marking a sixth consecutive month of expansion. The latest reading capped the sector’s strongest quarterly performance since the first quarter of 2014, supported by robust production growth and the fastest increase in new orders in nearly four-and-a-half years.
According to S&P Global, the expansion was driven by strong demand for AI-related technology and semiconductors, alongside continued gains in customer demand. However, the survey also highlighted that part of the strength reflected precautionary stockpiling by businesses amid the Middle East conflict. Shipping delays and supplier shortages continued to weigh on supply chains, contributing to some of the strongest inflationary pressures recorded since the survey began in 2001, with both input costs and selling prices rising rapidly again in June.
Looking ahead, S&P Global cautioned that the current pace of growth may prove difficult to sustain into the second half of the year. As geopolitical tensions ease and stockpiling activity fades, demand could normalize while elevated costs continue to pressure client spending. The latest survey therefore points to a manufacturing sector that is benefiting from strong technology demand and temporary inventory building, but whose resilience will increasingly depend on whether underlying domestic and global demand can continue to offset fading supply-driven support.
| Indicator | Previous | Latest |
|---|---|---|
| Manufacturing PMI | 54.5 | 54.8 |
| Quarterly Performance | — | Strongest since Q1 2014 |
| New Orders | Strong | Fastest growth in nearly 4½ years |
| Production | Expanding | Solid expansion |
| Supplier Delivery Times | Deteriorated | Deteriorated further |
| Input Cost Inflation | Elevated | Among highest since 2001 |
| Output Price Inflation | Elevated | Remained rapid |
