FX.co ★ Japan Composite PMI Stays at 4-Month High

The S&P Japan Composite PMI remained at 51.5 in July 2025, the same as June's final figure, according to preliminary data. This marks the fourth consecutive month of growth in the private sector, sustaining the most robust expansion observed since February. The ongoing growth was primarily propelled by an accelerated increase in services activity, which compensated for a new decline in manufacturing production. Though new exports rose modestly, they did so at the fastest rate in three months, driven by continuous growth in services despite ongoing declines in factory orders. Export sales experienced their most significant drop in nine months, with manufacturers witnessing a sharper decline than service providers. Employment showed a slight increase but remained at its slowest rate in 18 months, as companies adopted a more cautious stance. Input cost inflation reached its lowest level in four years, yet continued to be high due to elevated labor, fuel, and material expenses. Similarly, output price inflation saw a moderation. Lastly, business confidence dropped to its second-lowest level since August 2020, influenced by concerns over U.S. tariffs, weak demand, labor shortages, and demographic challenges.