Japan Manufacturing Sector Sees Strongest Growth Since 2018

Japan's manufacturing sector saw a significant boost in August, as new business grew at its fastest pace since January 2018. The S&P Global Japan Manufacturing Purchasing Managers' Index (PMI) rose to 54.9 in August from 54.5 in July, marking the eighth consecutive month of expansion.

The growth was driven by solid demand for semiconductors and AI-related products, with export orders increasing at their quickest pace since the start of 2018. Manufacturers also raised staffing levels for a 21st consecutive month, with the rate of job creation being the fastest since February 2018.

However, cost pressures remained elevated due to higher raw material and oil costs from the conflict in the Middle East, supplier bottlenecks around the Strait of Hormuz, and a weak yen. Firms were more optimistic about the year-ahead outlook, with confidence rising to a six-month high.