FX.co ★ Japan Factory Activity Returns to Contraction

The au Jibun Bank Japan Manufacturing PMI unexpectedly fell to 48.8 in July 2025, down from June's 13-month peak of 50.1, falling short of market expectations of 50.2. This represents the lowest point in three months, according to preliminary estimates. The downturn was primarily attributed to a renewed decrease in output, amidst continued uncertainty regarding US tariff policies and subdued demand. New orders continued to decline, with a similar drop in export orders, as businesses adopted a cautious stance due to ongoing trade tensions. Looking ahead, business sentiment weakened after hitting a five-month high in the previous month, highlighting increasing concerns about US tariffs and their possible impact on future demand.