Japan’s Manufacturing Sector Sees Fastest Growth Since 2018, Driven by AI and Semiconductor Demand
POLICY WIRE — Tokyo, Japan — Japan’s manufacturing sector experienced significant growth in August, with new business rising at the fastest rate since January 2018. This surge was driven by...
POLICY WIRE — Tokyo, Japan — Japan’s manufacturing sector experienced significant growth in August, with new business rising at the fastest rate since January 2018. This surge was driven by strong demand for semiconductors and AI-related products, according to a recent business survey.
The S&P Global Japan Manufacturing Purchasing Managers’ Index (PMI) increased to 54.9 in August from 54.5 in July, marking the eighth consecutive month of expansion. A PMI reading above 50.0 indicates growth, while below that level signals contraction.
Output rose for the eighth straight month, with the pace of growth only slightly easing from July’s near 12-year record. This was the second-fastest pace since February 2014, attributed to improved market conditions, new product releases, and higher volumes of incoming work.
Export orders also saw a significant increase, reaching the quickest pace since the start of 2018. This was due to stronger demand from North America, Southeast Asia, and China.
Manufacturers continued to raise staffing levels for the 21st consecutive month, with the rate of job creation being the fastest since February 2018. Backlogged work increased for the eighth straight month, with the pace of accumulation being the second-quickest since February 2014.
Cost pressures eased for the second month, with input price inflation slowing to its weakest since March. Selling price inflation also softened to the lowest since April.
📄 POLICY WIRE WHITEPAPER PUBLISHED: PAKISTAN’S NATIONAL SECURITY POLICY PRIORITIES
Despite the easing of cost pressures, price pressures remained historically 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 expressed increased optimism about the year-ahead outlook, with confidence rising to a six-month high and staying above the long-run trend. Companies attributed the positive sentiment to stronger market conditions, new product launches, and demand for semiconductors and AI-related technology.
Reporting by Policy-Wire (PW)
