Japan’s Manufacturing Sector Returns to Growth in June; Services Expand Further

Japan's manufacturing activity rebounded in June, marking its first expansion since May 2024, as per data released Monday. The au Jibun Manufacturing PMI rose to 50.4, beating expectations of 49.5 and up from 49.4 in May.

Manufacturing Sees Modest Recovery

• The PMI reading above 50 signals growth, with June data indicating rising output and inventories.

• Despite muted global demand, new orders picked up, even as U.S. trade tariffs continued to weigh on automakers and exporters.

The improvement in manufacturing follows months of contraction and suggests that Japanese industrial sentiment is stabilizing, potentially aided by local economic resilience and strong corporate wage growth earlier this year.

Services Sector Maintains Momentum

Japan's services PMI rose to 51.5 in June, up from 51.0 in May, as strong domestic consumption kept the sector in growth territory. The composite PMI, which tracks overall private sector activity, rose to 51.4 from 50.2.

Rising services activity, backed by wage hikes and improving local demand, continues to balance out lingering weakness in global-facing sectors.

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