FX.co ★ Japan Private Sector Shrinks in May

The au Jibun Bank Japan Composite PMI decreased to 49.8 in May 2025 from 51.2 in April, according to preliminary figures. This marks the second decline in the past three months, primarily due to a deceleration in service industry activities and an ongoing downturn in manufacturing for the 11th consecutive month. New orders from both sectors declined for the first time in nearly a year, while international demand decreased for the second consecutive month. Although employment figures showed growth, the pace was slower due to decreasing work backlogs following a period of stagnation in April. Regarding pricing, cost pressures remained high, but there were early signs of reduced input inflation. Operating expenses increased at their slowest rate in over a year, leading to only a moderate rise in selling prices. Business sentiment has fallen to its second-lowest point since the COVID-19 pandemic began, hindered by uncertainties surrounding future trade conditions and reduced demand from overseas, which have adversely affected output expectations for the coming year.