Japan’s manufacturing activity rose at a slower pace in September from the previous month as output and new orders softened, while solid overseas demand helped firms’ activity, a private-sector survey showed on Thursday.
The private sector activity continued to expand in Sep-26, although growth moderated to its weakest pace since May-26. The S&P Global Japan Composite PMI eased to 52.5 from 53.5 previously, reflecting softer momentum across both the manufacturing and services sectors.
The moderation was led by the manufacturing sector, with the S&P Global Japan Manufacturing PMI slipping to 54.1 from 54.9. Both output and new orders expanded at a slower pace, suggesting domestic demand softened. Nevertheless, external demand remained supportive as new export orders continued to record solid growth.
Services activity also lost momentum, with the S&P Global Japan Services PMI falling to 51.6 from 52.5. However, despite the softer pace of expansion, firms continued to increase hiring, contributing to the fastest private-sector employment growth in seven months.
Business sentiment improved to its strongest level since Feb-26, supported by expectations of sustained demand from AI-related industries, semiconductors, defence and automotive sectors. Meanwhile, input cost pressures remained elevated amid higher energy and raw material prices, partly driven by Middle East tensions and the yen weakness.
Looking ahead, MBSB said it expects Japan’s economy to remain on an expansionary path, supported by resilient export demand and technology-driven sectors. However, softer domestic demand and persistent cost pressures suggest growth momentum may continue to moderate in the coming months.
