Japan’s Factory Activity Hits 19-Month-Low in October, PMI Shows

Reuters

12:28 JST, October 24, 2025

TOKYO, Oct 24 (Reuters) – Japan’s manufacturing sector contracted in October at the fastest pace in 19 months due to a sharper decline in new orders, a private-sector survey showed on Friday.

The S&P Global flash Japan Manufacturing Purchasing Managers’ Index (PMI) fell to 48.3 in October from a final reading of 48.5 in September, hitting the lowest since March 2024. It has remained below the 50.0 threshold that separates growth from contraction for four straight months.

Among the sub-indexes, the decrease in factory output slowed from September, but new orders shrank at a faster rate, highlighting sluggish demand for manufacturers.

October’s drop in new export orders, however, was the slowest since March. Data showed Japan’s exports rose in September for the first time in five months.

The outlook for output also recovered to a three-month high, the PMI data showed.

“Manufacturers were more upbeat about the year ahead than service providers, with many hoping that a recovery in global economic conditions, new product releases and stronger demand for electronics in particular will help to boost output,” said Annabel Fiddes, Economics Associate Director at S&P Global Market Intelligence.

The broader picture for Japan’s corporate activity remains challenging, as service sector growth also slowed, with the flash Japan services PMI dropping to 52.4 in October from 53.3 in September.

The composite PMI, which combines both manufacturing and services, fell to 50.9 in October from 51.3 in September, marking the slowest growth in five months.

Inflationary pressures continued to build, with both input and output costs rising at faster rates than in September on a composite basis. Companies often linked the price increases to “higher employment, raw material and fuel costs, alongside a weak yen,” Fiddes said.