Japan manufacturing PMI contracts for 11th month in May

SINGAPORE (ICIS)–Japan’s manufacturing purchasing managers’ index (PMI) continued to contract in May, with a reading below 50 for the 11th consecutive month.

The May number at 49.4, however, inched up from 48.7 in the previous month as downturn in new orders eased, au Jibun Bank said on Monday.

A PMI reading above 50 indicates expansion, while a lower number denotes contraction.

“Business conditions faced by Japanese manufacturers deteriorated at the softest pace in 2025 so far in May,” the bank said in a statement.

Operating conditions for investment goods makers in Japan improved in May, while conditions deteriorated at a softer pace across the intermediate goods segment.

A softer decline in overall new work received by Japanese manufacturers in May contributed to the improved index.

Total new business fell modestly, generally linked to subdued demand amid US tariffs and increased “client hesitancy”.

The decline in new export orders also moderated since April.

Softer demand conditions led to a further reduction in factory output across Japan during May.

The rate of contraction was modest, though it quickened slightly from April.

Optimism strengthened for the year-ahead outlook for output, rising from April’s near five-year low, au Jibun Bank said.

“Growth projections were often supported by forecasts of firmer global demand conditions and new product releases,” it said.

However, some firms expressed concerns over US tariffs, inflation, and a shrinking population.

Manufacturers in Japan signaled another marginal deterioration in supplier performance during May.

A number of companies suggested that material and labor shortages at some vendors had stretched delivery times.

Average input costs faced by Japanese goods producers increased at a softer pace in May, with the rate of inflation the weakest in 14 months.

At the same time, selling price inflation also eased in May, with charges rising at the softest rate in nearly four years.

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Thumbnail image: At a port in Tokyo, Japan, 12 May 2025. (FRANCK ROBICHON/EPA-EFE/Shutterstock)