A trade agreement between Japan and the US in July 2025 provided partial tariff relief, but ongoing challenges particularly in aluminium and auto parts continued to weigh on Japan’s manufacturing output. While services accelerated domestic demand, the country’s industrial base remained under pressure amid evolving global trade dynamics.
The S&P Global Japan Manufacturing Purchasing Managers’ Index (PMI) fell to 48.8 in July, dipping below the crucial 50-point mark that separates growth from contraction. This marked a reversal from June’s 50.1, the first expansion reading in over a year.
Economics Associate Director at S&P Global Market Intelligence Annabel Fiddes said, “Business activity across Japan's private sector continued to expand at the start of the third quarter, fuelled by stronger growth of the service sector.”
Yet in manufacturing, key components such as output and new orders saw their steepest declines in several months.
“Uncertainty over future trade policy weighed on expectations regarding the year-ahead,” Fiddes noted, reflecting the sector’s cautious sentiment.
Events
e-Magazines
Reports
Responses
