Japan’s S&P Global Composite PMI Business Activity Index inched up to 53.1 in July 2026 from a final 52.8 in June, according to flash estimates. This was the highest level since February and marked the 16th consecutive month of expansion in private sector activity.
Manufacturing output accelerated at its fastest pace since 2014, even as growth in the services sector moderated. Overall new orders increased at a slower rate, reflecting softer demand for services, although new export business rose at the quickest pace in four months.
Employment continued to expand for a 34th straight month, with the pace of job creation broadly unchanged. However, capacity pressures intensified, as backlogs of work accumulated at the fastest rate since February’s record high.
On the price front, input cost inflation slowed to its weakest level since April but remained elevated, amid persistent supply and energy cost pressures linked to conflict in the Middle East. Firms raised output charges more aggressively, while business sentiment deteriorated from June, dampened by concerns over energy and raw material costs, as well as ongoing supply chain risks arising from geopolitical uncertainty.
