FX.co ★ Japan Composite PMI Falls for First Time in 5 Months

The au Jibun Bank Japan Composite PMI declined to 48.5 in March 2025, a decrease from February's 52.0, according to preliminary figures. This represents the first shrinkage in private sector activity since October and marks the steepest contraction since February 2022. The service sector contracted for the first time in five months, and manufacturing registered its ninth consecutive monthly decline, also witnessing the fastest downturn within a year. New orders receded following February's expansion, largely due to a sharp decline in manufacturing and a pronounced deceleration in service sector growth. Despite this, foreign sales and employment saw improvements, and the backlog of work reduced at a slower rate. Concerning pricing, input costs surged at a quicker pace, though the increase in selling prices was less pronounced compared to February. Finally, business sentiment reached its lowest level since August 2020, influenced by worries over cost pressures, labor shortages, reduced client spending, and increased uncertainty in the international trade landscape.