Japan Manufacturing Shrinks Less than Expected

The S&P Global Japan Manufacturing PMI edged up to 49.9 in August 2025 from a final 48.9 in July, surpassing market forecasts of 49, preliminary estimates showed. The latest figure marked the thirteenth contraction in factory activity over the past 14 months, driven by a further decline in overall sales—including a solid drop in foreign sales for the fifth consecutive month—amid the imposition of new US tariffs. This indicates that growth is currently being largely fueled by domestic demand. The ongoing weakness in sales suggests that a recovery in manufacturing output may be difficult to sustain unless there is an improvement in demand in the near term. Meanwhile, output increased slightly for the second time in three months, albeit marginally, supported by improved client demand and a rise in new work.